OPEN INSPECTION PREPARATION WHEN YOU LOOKING FOR PROPERTY TO BUY

no matter you are looking for a house or commercial property, prepare a checklist is a good start, followed by good question to the agent or owner during inspection. Therefore, at the end of the day you can see how much each property would meet your requirement then you can rate them.

FIRST SET OF QUESTIONS FOR YOURSELF WHEN SEARCHING PROPERTY?

1. Where you want to live?

In term of buying, the top one is affordability but surrounding environment & facilities are also important such as good school (what school catchment area it is in), neighbourhood, peace, proximity to shops, public transport, close to where you work, etc.

2. Room(s) to suit your needs?

Depend on your future planning, number kids you (will) or currently have, will your parents or in-laws stay with you, study room or room for home office? Either way, consider to future-proof the number of rooms you’ll need in the future rather than that you need now.

Position of the room may be important too, say, you may not want the TV room too close to your study or home office. Room facing west would get warm or hot quickly not just in summer.

3. Are the property’s building and roof structurally sound?

This question actually you cannot answer by yourself nor your observation, you should get a building inspector to do the assessment for you to check the details of build quality, various fittings and installation which meeting standard and well-maintain or not. Often, some minor fault that sellers may not even aware of may provide you a further negotiating tool, of course, it is not worse enough to impact the safety of dwelling.

4.Is Garden or the yard suitable for your need?

Some of my friends really love gardening, they said the nice-green and good plant make them comfortable and add value to their house. Size and quality are 2 different things, you may love to have large backyard to play with your kids or BBQ with your friends. When it comes to maintenance like lawn mowing, tree trimming, you could have headache.

Consider whether the size is suit your need? Steep slope or level backyard? Are your preparing fork out more money to pay for maintenance or do it yourself?

5. Good natural light coming in the house?

Appear to be very personal preference but my wife love a lot of sun light coming in to the house, may be human nature too, be able to tell day and night, good or bad weather 😊

Facing north would be optimum for natural lighting so during inspection, see if there are windows and not too many trees blocking the light if you don’t want compromise to use electric light during day time.

6. Does the property have adequate utilities you need?

Sufficient power points and their location are important nowadays, sometimes it would cause you headaches as you don’t want too many cables running around.

Internet availability, check with ISP to see what sort of technology is availability to the property location, ask if the owner what ISP they are using, NBN is ready yet?

Mobile phone coverage, simply test it by making a call while you are in the property and even walking around the house while calls is ongoing to see any bad reception spot in the house. It happens some of my friend have to wait for call in front of the house because no mobile phone reception inside.

Hot water systems are working fine? Ask the owner how to operate it as different brand are working differently; it may cost extra $1000-$2000 if they need replacement.

Water Pressure could be a concern to some people if it is too low, good to try it by open the tap and shower, see if it is acceptable to you

Air-conditioning usually can be ducted or split-system, important of all, is it an efficient system otherwise you may spend more in paying electricity bill and maintenance.

Sufficient parking space for you and your family? Are you happy to park the car on driveway or in front of the property, some insurer may require you to park inside the garage, good to check with your insurer?

7. Any sign of termite activity?

This is another you better have professional look into it for you. Even though it is not end of the world, it would be better you know about it and do something about it based on the professional opinion, however, if you don’t feel comfort, better not to go ahead with your deal.

8.Any planned developments nearby?

It could be a big issue if there are major development next door or nearby. Noise level would increase as well as traffic and dust depend on the scale of construction. Seriously, it could impact the value of the property.

Therefore, it would be good that you could drive around the neighbourhood area and observe any DA or major construction coming or even go to council to check any approval of DA.

Unless it is very bad enough that you want to break the deal otherwise good to try to liaise with the owner if they can do something in the price.

9. Is the property at the flooding zone?

No matter it is global warming or not, weather is always hard to predict. One of the most common natural disaster is flooding, in case the property in the flooding zone, make sure you could insure your home and content about it.

10. Common ongoing costs of the property?

Usually, agent would be able to tell, it is always good to know and put in your budgetary. Council rate, Water rate, Insurance, Levy or Strata fee for units or apartment or townhouses complex

11. Property boundaries?

It should appear in the contract but make sure you know where it is and see if it is clearly defined as appear at the fence. Otherwise, it could be potentially an issue with your neighbour in future. Get some professional to help you if you are not sure.

12. Do you need renovate the property?

Basically, there are two aspects on this question, you want to renovate the property because it is too old (almost nearly not inhabitable) or just personal preference?

If the former one, you might talk to the agent where the price are negotiable or not, for example, toilet is too old, the whole house painting is peeling off, renovation is inevitable.

However, if it is your personal preference, you want renovate anyway. It is obviously that you may bear all the cost and if it involves something to structural change, there may cost you more. It is always prudent you could have professionals to estimate the cost for you before you make an offer and close the deal

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PROPERTY BUYING COST

1.  Stamp duty is the tax payable to the Government, it is calculated based on the value of the property, it is also dependent on property type residential or commercial, investment or primary residence; first home buyer or not.  Stamp Duty Calculator

2.  Legal fees are typically $1500 approx. or more. it could be more depending on the complexity of the contracts,

3.  Pests and Building inspections which could be $300 to $400 roughly

4.  Mortgage duty roughly between $300 to $400

5.  Loan application fee, varies between Banks.

6.  Independent valuer in case you require someone to value the property you are planning to purchase, it may cost $500 or more

7.  LMI (Lenders Mortgage Insurance), it is required if you borrow more 80% of the property’s price, this insurance is covering the lender (e.g. bank) in case loan default. The cost varies but good to allow roughly $10,000 for LMI. Best, of course, is to borrow up to 80% of less if possible!

8.  Registration of title - you are required to register the title with the NSW state government for $75. 

9.  Council Rates and Strata levy - these commence from settlement. Allow for an extra $650 to $2000

10. Strata report for strata title property e.g. apartment, units - typically $200 or more; the report should mention if any repair or outstanding repair happened in common area, etc. Good to have it before you purchase the property in case some major issue that might cost you in future after become an owner.

11. Moving cost - it includes the physical moving cost, cost you move your utilities, water/electricity/phone to new premise

USUALLY , HOW LONG IS THE SETTLEMENT DATE?

Settlement date is the date that selling party officially handover the property to buyer while buying party pay the rest of agreed property price to seller (via bank usually). The period of time from contract exchange to settlement date are usually 42 days in NSW, however, it can vary from 30 to 90 days as long as both parties agree.
Therefore, two-ways communication is very critical that both parties come to agreed settlement date which are realistic to both, so consult your solicitor as well given there are a lot of legal papers work, your bank if loan approved on time, booked removalist, etc.

TO BUY A PROPERTY OR JUST RENT AND INVEST OTHER FINANCIAL PRODUCT?

You may hear people saying it is very hard to catch up the today’s property price. Most people think it may even more economical to rent rather paying mortgage given the current house price to rent ratio is so high.
If you and your family can accept long-term renting, and there is also a good financial product with good return on investment (ROI), then renting to reduce stress and save money for good ROI is not a bad idea, however, a lot people with this idea failed to do so. Why?
One reason is very hard to find an investment with small risk and high return. Compared to house, it is almost impossible for a person to borrow 80% on other investment product; even if some financial products can be leveraged, the risk is also very high. In order to gaining a stable return of $90,000 to $110,000 per year, the money invested should not be less than $1.1 to $1.35 million. This is what most people are reluctant to take out as this large amount of money for investment.
Most people, on the other hand, love to make their limited money available for maximum use. They choose to buying a house so they can borrow 80% from the bank and leverage the knowledge of professionals who are, real estate agent, accountant, solicitor, etc, could provide them advice and strategy because investment in real estate is also risky, so it is particularly important to rely on the expertise of professionals. Professionals can assist you to minimise the risk by constantly review some indicators such as net population inflow, GDP per capita, supply of market, sales to listing ratio, buyer type in the suburb, capital investment in the suburb, government policy, etc.
If you are not at the age of retirement, you should not worry too much about repayments, home mortgage pressure will make you work harder. You should consider to accelerate the accumulation of assets with the help of banks and professionals. Moreover, do not just look at price-to-income ratio to justify the house price, simple reason is their capital gain. If you are lucky enough in your career, you could double your salary in 10 years’ time, say $70K to $140K, it could happen in house price, e.g. $700K to $1.4M. Therefore, professionals may give you advice for the chance of future re-development of the property, potential growth of the area in long term, etc. Again, no one can predict the future but professionals would help to minimise the risk. Finally, if you have good affordability and serviceability, it is not too late to enter the housing market.

SHOULD I INVEST IN COMMERCIAL OR RESIDENTIAL PROPERTY?

Investment return on commercial and residential property has different advantage, residential property gives steady rental income, demand is usually higher as everyone need a place to live in and terms of agreement are very regular. Outgoings expense such as Strata Levy, Council rate, Water sewage are to be paid by landlord. Therefore, return after expense are relatively lower.
Whereas, in commercial property, the term of rental agreement is negotiable, usually the tenant would pay GST on top of the rent, outgoings like Levy and Council rate, etc. The lease term can be 3 x 3 years or 5 x 5 years in order to protect the tenant’s investment on installation and renovation of the commercial property, therefore, rental return of commercial can be relatively higher.

Disclaimer: The Information contained on this website is information purpose ONLY. No one or entity guarantees the performance of property or its Market. TPSM Pty Ltd assumes no responsibility for error or omissions in the contents. The information does not take into account your personal needs, individual objectives and financial situation.  We recommend that you obtain financial, legal and taxation advice before making any decision.