Start with Why
As Simon Sinek once said, you need to start with why.
It’s easy to get excited about seeing new properties, and even easier to quickly fall in love with a particular aspect of a home like a kitchen or outdoor area, but it’s important to remain objective to make sure the property checks all of your boxes.
Property can be a largely emotional purchase, so you need to consider a few things before falling head over heels for a property:
- ✅What is your ‘why’ for buying this property?
- Is it to live in, are you going to rent it out in the short term, what is the property’s main purpose?
- ✅Do you plan on staying in the property for a few years?
- Your first home is not likely to be your forever home, it is just your first step towards your future mansion!
- ✅Can you afford repairs and upkeep on the property?
- If it is an older Queenslander-style property have you budgeted for ongoing repairs and maintenance? Will it need a new kitchen and bathroom in the short term?
- ✅If you bought the property, who would buy it from you in a few years?
- I like to start with the end in mind; when buying a property I always think about who I will sell it to in a few years. If it’s going to be a very narrow market like retirees, is this going to harm the growth potential of the property?
Warning: Not All Properties are Okay with the Banks
Did you know that if a lender isn’t satisfied with the property condition, they may not approve your loan? This is why it is important not to buy a property before you apply for your loan. Keep the following tips in mind as a general rule when finding the right property for which a lender will approve your loan:
- ✅The unit should be at least 50 m² excluding the parking garage and balconies
- ✅Some lenders don’t approve a property if land area is more than 2 hectares, but it varies from one bank to another. There are some lenders who also accept a property as a security even if the area is 50 hectares or higher.
- ✅Some banks reduce the loan-to-value ratio if the property is located in a remote area.
- ✅Banks may value the property way less than its purchase price if the seller has included furniture in the purchase price, and offers a settlement rebate and rental guarantee.
All in all, the property has to be in good condition if you want the bank’s approval. In addition to that, make sure that when finding the right property, you get the building and pest inspection done and get a strata report, especially if you’re buying townhouses or units.