Purchasing a property is one of the biggest financial decisions an individual can make. It requires careful consideration and planning to ensure that you are making the right investment for your future. With 25 years collective experience in the industry, equiti has seen many successful and not-so-successful property purchases. In this blog, we will discuss the six most important things that every property buyer should consider before making their purchase.
Before we dive into the topics, it's essential to understand why these considerations are crucial. Property buyers need to be informed and make educated decisions when purchasing a property. This will not only help them avoid costly mistakes but also lead to better returns on their investment. So, let's get started with our first topic.
1. Being clear on why you are purchasing in the first place!
It may seem obvious, but many buyers often overlook this essential aspect of property purchase. Before starting your property search, it's crucial to be clear about your intentions for buying a property. Are you looking for a long-term investment or a short-term flip? Do you plan on living in the property or renting it out? Knowing your purpose will help you make informed decisions and narrow down your options.
2. Buy new and buy well.
Buying a new property has its advantages, such as modern features and fewer maintenance costs. However, not all new properties are created equal. It's essential to research and buy from reputable developers who have a track record of delivering quality homes. This will ensure that you are getting value for your money and reducing the risk of any issues in the future.
3. Only build or buy from a reputable builder.
If you are considering building a new property, it's essential to do your due diligence on the builder. A reputable and experienced builder will ensure that your property is constructed to the highest standards and meets all necessary regulations. This will not only give you peace of mind but also add value to your investment.
4. Be mindful of the yield and the implications on cashflow.
When purchasing an investment property, it's crucial to consider its yield - the annual rent divided by the purchase price. A high yield indicates a better return on your investment. It is also important to factor in other costs such as maintenance, insurance, and management fees. Sometime a lower yield with stable expenses may be a better option than a high one with unpredictable expenses.
5. Make sure you are buying rent-ready or move-in ready.
For investors planning on renting out their property, it's crucial to purchase a rent-ready property. Similarly, for those purchasing for residential purposes, make sure that the home is move-in ready with all necessary fixtures and fittings, including blinds. That means there will be no nasty surprises at completion.
6. Look in the right places… location, location.
The location of a property plays a significant role in its value and rental demand. It's essential to research the area and consider factors such as proximity to public transport, schools, and shopping centres. Buying in an up-and-coming area may also result in good capital growth over time.
Purchasing a property is a significant decision that requires careful consideration. As we have discussed, being clear on your intentions, buying from reputable developers or builders, considering gross yield and expenses, and selecting the right location are crucial for making a successful investment.
If you are in the market to purchase a property, we encourage you to reach out to your mortgage adviser and get your lending sorted. This will allow you to move quickly when the right opportunity arises. Alternatively, contact our team at equiti, and we can assist you in finding properties that meet your needs. And if you are a financial adviser, make sure to share this article with your clients and help them make informed decisions about their property investments.