Buying property does not automatically guarantee financial success.
But make a sound purchase and a buyer stands to gain tens of thousands of dollars, even in a slow property market.
Getting advice can be helpful, but be sure to take the advice from someone who has been successful. The truth about property can often be hard to find as most of the “advice” comes from people trying to sell you property.
But it’s pretty simple, says finance guru Paul Clitheroe.
“If you live somewhere where the population is growing and there is a shortage of land and housing, start thinking about buying a property,” he told Money magazine.
“If you can add employment, schools, health services, leisure facilities, a decent coffee and good public transport, then I think that with a long-term view you would be silly not to buy in that area.”
Location, location, location
There’s a lot to be said for buying the worst house in the best street, or a rundown house in a great suburb, according to real estate expert Andrew Winter, host of Foxtel’s Selling Houses Australia.
“It’s harder to overcapitalise and even the smallest renovation will add value,” he said.
Go for growth
Do your research, listen to the experts and find an area with a bright future.
“Good roads and public transport push prices sky high. But you’ll have to take a punt to make it big; there’s no use buying when construction has already started. You need to buy in the planning phase and hope that road or rail links actually get built,” said Winter.
Find an ugly duckling
But you must be prepared to do the renovation work yourself, he adds: “The price of a “renovator” is set according to how much it will cost for a professional to do the job so if you can do some or all of the work you’re bound to come out in front.”
It’s all about knowing a good deal when you see it and taking advantage.
“One person’s loss is another person’s gain. Look for vendors who need a quick sale like repossession, divorce or deals that have fallen through,” said Winter.
“Keep your ear to the ground and be ready to grab a bargain.”
Buy a property with a restricted supply. An amazing view is always a good bet because we can’t make more beaches and rivers. The same rule applies for fine period architecture, said Melissa Opie, author of property guide, Find the Right Property, Buy at the Right Price.
“Buy properties in line with the dominant architectural style of their location. Period properties hold their value better than newer ones,” she writes.
It is more expensive to follow this rule, but it is low risk with stable long term growth, adds Winter.
Get the right finance
One of the easiest ways to capitalise on your property over the long run is to limit the amount of interest paid on your home loan.
For instance, for a home loan of $400,000 repaid over 25 years at a rate of 6 percent a borrower would have to fork out a whopping $373,000 in interest – and that’s after repaying the principal.
By choosing a home loan carefully a borrower could significantly reduce that amount, according to RateCity spokeswoman Michelle Hutchison.
“Just a few basis points difference between rates could add up to tens of thousands of dollars over the long term, so it’s worth comparing your mortgage,” she said.
“There is heaps of competition in the mortgage market at the moment and lenders are eager for your business so borrowers should be using this to their advantage to find long term savings.”