What's the right property for you?
Are you looking for a new home or investment property? Before deciding which property to buy, you need to think about your lifestyle, your current and anticipated housing needs, and your budget. It's a good idea to create a list of features you want in your new home in order of priority - you'll soon discover that finding the right property involves striking a balance between your "must-haves" and your "nice-to-haves".
If you are looking to purchase a new home to live in, a good place to start is to consider your lifestyle. For example, if you love to cook, you will want a well-equipped kitchen. If you enjoy gardening, you will want a backyard. If you work from home, you may want an extra room to have as a study or work space. If you have several cars, you may require a larger garage. A list of such requirements will form your search guide.
It is also important to think about what you might need in the future. As you consider your housing needs, it's important to think about how long you may live in your home. If you're newly married, you might not be concerned with living close to schools right now, but you could be in a few years' time. If you have older parents or relatives, you may want to look at homes that offer living arrangements for them as well.
It is important to think about a property's location just as carefully as you do its features. Location is a big consideration in any move. In addition to thinking about the distance from your place of work, you need to evaluate the availability of shopping, police and fire protection, medical facilities, school and child-care, traffic and parking, waste collection services and recreational facilities.
Another key decision is the type of property you want. Do you want an apartment or a house? A townhouse or a semi-detached property? What type of construction materials are you after? Would you prefer a brand new property or is age not necessarily a large consideration?
Stand-alone homes offer the opportunity to have a garden, provide more privacy and are generally quieter. However, they are usually more expensive than apartments and generally require more maintenance. Alternatively, apartments are typically less expensive than comparable stand-alone houses and may not require any backyard or exterior maintenance. However, they may offer less privacy, could be noisier, have common walls, floors and/or ceilings, and usually require additional expenses such as body corporate fees and strata levies. Alternatively, if you are looking to purchase an investment property these considerations are important along with others including the ability of a property to be rented out, and the types of tenants you wish to attract.
Be sure to talk to your real estate agent about where you want to live and the property features that are important to you. While many buyers are using the Internet to search for properties for sale, it is still a good idea to talk to a real estate agent.
The agent can guide you through the entire home buying process; he or she can provide and analyse data, answer questions, share professional expertise, and handle much of the real estate transaction. I am a real estate professional and have the know-how to help clients narrow down their purchase choices by sharing market trends and local information and offering accessible, clear and expert advice.
How much can you afford?
Now that you have a better idea about what you're looking for, the next step is to determine how much you can afford to spend when buying a property. A review of your income, savings, monthly expenses and debt will be necessary to set an appropriate budget.
An early step in the process is to gain pre-approval for a home loan. In sitting down with a mortgage professional you will also be able to get a better idea as to how much you can afford to spend on a property. Gaining pre-approval will enable you to move swiftly when you find the right home, especially when there are other interested buyers. Having mortgage pre-approval also indicates to the seller that you are serious and can afford to buy the property.
Pre-approval for a mortgage is granted by a lender and tells you the amount you will be able to finance through a loan and what your monthly repayments will be. When you find a property to buy, this pre-approval reassures the seller that you have the financial means to purchase the home.
Understanding how much you can afford is the first rule of home buying, and the amount depends on how much income and how much debt you have. It pays to visit several lenders before you start searching for a property to purchase. Alternatively, you can sit down with a mortgage broker, who should have access to a variety of different mortgage packages from many different lenders that will be appropriate for your circumstances.
The price you can afford to pay for a property will depend on several factors, such as:
- Monthly income
- Savings available for a deposit
- Debt levels
- Credit history
- The type of mortgage package you select
- Current interest rates
Every buyer is unique and a mortgage professional can help you to determine just how much you can afford. Your income and debts will typically play the biggest role in determining the appropriate price range.
Make use of calculators that show what your repayments would be per month on a certain loan figure. Shop around for the loan that suits your lifestyle but always factor in the possibility of interest rate increases - could you still afford to make your repayments at a higher interest rate?
Know your neighbourhood
When you buy a property, you're also investing in a community. You will likely spend a significant amount of time and money supporting the schools, community organisations and businesses in the surrounding areas. Before you make your final decision, make sure you have a good look at the location to ensure that it suits your needs.
- Evaluate the property's proximity to other important locations that you visit on a regular basis. How long will your commute to work be? Is there a hospital or doctor located nearby? Are you close to schools, child-care, shopping facilities, and family and friends?
- Consider all of your transportation options. Are you close to appropriate modes of public transport? It can be useful to take the time to drive from your potential new home to destinations to which you must commute to understand the time required and the impact the commute will have on your lifestyle.
- Visit and understand the schools in the area you will be moving to. Even if you don't have children now, you may some day. It is also possible that your proximity to schools could have an impact on the price of your future home should you decide to sell at a later date.
- Make sure you feel comfortable in the area. Drive/walk around the neighbourhood at different times of the day or night on both weekdays and weekends to observe activity and noise levels. Discovering noisy traffic conditions may have an impact on your decision to purchase a property.
I am a real estate professional and am a expert in the entire Auckland area. Ask me for a list of schools, shopping centres, parks and other important amenities. Buying a new home or investment property is about more than just the physical property itself - it is about lifestyle as well.
Should you buy or sell first?
Buying a new home and selling an existing property at the same time can have its own set of challenges. But with planning you can ensure everything goes smoothly.
Before putting your current home on the market or committing to buying a new one, you should consider the prices of properties in the areas in which you will be both buying and selling. You will need a realistic idea of sales prices for comparable properties so that you can assess both your buying and selling position. I can help you with this part by providing you with these details and to get an idea of what your home could be worth in the current market.
What happens if you are unable to perfectly time the sale of one property with the purchase of another? You may find yourself in a temporary situation of not owning a property at all for a period of time, in which case you will need to find a temporary place to live. In this situation you will need to consider short-term housing possibilities, which could include staying with family and friends, or in a rental property. You may also need to look at how to store furniture and other wares.
Alternatively, you may find yourself owning two properties at once, whereby you may need to look at financing options that allow you to pay a deposit on your new purchase before you have access to the funds required to pay for the property in full, which will become available once your previous property has successfully sold.
Buying a second home or property
Purchasing a second home (in addition to owning your first property) is not too different from buying your first property. Your ability to afford it usually depends on your ability to gain mortgage approval. The benefits of purchasing a second property include having a holiday getaway, a future retirement home, receiving rental payments which can be put towards paying off a mortgage, or adding to your investment portfolio.
Many people see buying a second property as an investment opportunity. In order to make the purchase successfully you will need to identify funding sources for a deposit, as you won't be selling your current home and using the proceeds, and you will also be required to pay a large monthly amount to cover the mortgage repayments of both homes and other necessary expenses.
Searching for your new home or investment property
Once you have a good idea about the features you require from a property you will be in a good position to start investigating potential purchase options. Such options can be found by visiting a real estate agency in the area in which you are interested, or by conducting a search online or in a newspaper.
Once you have identified some properties of interest, you can contact the relevant real estate agent to arrange an inspection, or alternatively visit the property at the advertised public inspection time. After touring each property, note what you liked and didn't like about it. It may be helpful to develop a rating system that will help you to compare properties. For example, pick the property you like most on day one and compare all subsequent properties to it. Once you find a superior property, use this new favourite as the standard.
Another way of approaching the research process is to appoint a buyer's agent to help you find a suitable property. This agent can represent your interests in a real estate transaction and can guide you through the process of identifying properties that meet your criteria. Before making a decision however, have a real estate agent explain the pros and cons of using a buyer's agent.
Working with a real estate agent
Buying a property is one of the most important decisions you will ever make. For this reason it is in your best interests to choose an experienced real estate agent to work with who listens to and understands your needs, and has a thorough knowledge of the area in which you want to live or own property.
When you work with me, you can trust you will be dealing with a professional who understands your concerns and will provide you with a level of personalised service that makes the buying process that bit easier.
The global Harcourts Real Estate network will help you to navigate the life changes that real estate decisions can bring.
What should you expect from your first meeting with me? I will typically talk to you about the neighbourhood in which you want to live, dwelling values, schools, transportation, and the surrounding commercial and residential areas.
Advice for first home buyers
Purchasing your first home can be a daunting experience and is most likely the largest financial commitment you have made thus far. Although the initial outlay may seem like a lot, by paying off a mortgage each month you are actually building equity and essentially setting yourself up for the rest of your life.
The first step to buying your first property is to save for the money for a deposit. Depending on your current spending patterns, this could be quite an easy or difficult task. There are countless tips on how to cut back on your expenditure, including creating a budget, using cash instead of credit and paying off your credit card in full each month to avoid paying interest, however you will find that what is really needed is often an attitude change whereby your focus changes to simply saving as much as you can.
First home buyers should try to do as much research as possible. When buying a property it is essential to be aware of all the costs involved beyond the property itself. There are usually legal fees, home loan application fees that must be paid and thus factored into your budget. Be aware that these costs may have an impact on the amount you can afford to spend on the actual property.
Although the process of buying your first home can sometimes prove to be a stressful time, try to enjoy it. You have worked hard and may have sacrificed much to save the money to get to this point and you should be very proud of your new purchase.
Purchasing an investment property
As like a home purchase, preparation is paramount when buying an investment property and a great deal of homework is required to ensure you capitalise on your purchase.
The rental market is a serious consideration when determining where to purchase an investment property. By speaking to local real estate agents in locations where you are interested in purchasing you should be able to get a better idea of local factors that may influence your decision, including vacancy rates and average rental prices.
When buying an investment property it is important to keep in mind factors that will be attractive to potential tenants. These can include closeness to transportation, shops, education facilities and common working locations (such as CBD areas).
As well as tenant appeal, location is also an important consideration for ensuring capital gain and return on investment. Investors could do well to research areas that remain relatively viable to buy into, yet are still experiencing growth in values.
Another prime consideration for investors often concerns whether to purchase a house or an apartment. The difference between the two dwelling types is usually financially significant. Often an apartment could be a better option than a house for investment purposes given that an apartment may require less maintenance. However, apartments could require investors to pay various strata levies and body corporate fees, and will generally achieve less capital growth than houses.