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Reproduced with permission.
Over the last few months, I have been detailing my Top Ten Golden Rules for House Hunting.
In this week’s newsletter, I have briefly outlined each one of my rules. However, if you are looking for more detail on any or all of the golden house hunting rules, you will find links to each of the articles at the end of this article.
Golden Rule #1 – Buy the worst house in the best street.
This rule highlights how important location is. As you cannot change where a property is located, you’d better make sure you get this right!
Golden Rule #2 – Look for streets with redeeming features.
Ideally, a street should be wide, tree lined, houses set well back from the street and the houses should be appealing e.g. character/period style homes.
Golden Rule #3 – Look for improving areas with easy access to city/beach/facilities.
This is all about gentrification. That is, suburbs that were run down, undesirable and used to have depressed property prices but due to a number of factors, have regenerated, are now popular and property prices have increased substantially.
Golden Rule #4 – Capital growth is dependent on Location, Land , Looks.
The geographical position of a property, the land component and the style and views from a property are critical in determining its future potential capital growth.
Golden Rule #5 – Avoid buying near adverse locations.
Avoid buying property in locations that are in close proximity to factories, electricity sub-stations, cemeteries, 24 hour shops and bars/night clubs.
Golden Rule #6 – Consider if you could resell the property in the ‘bad’ times.
The ‘bad’ times are periods in the economic and/or property cycle where demand is very soft and it is a buyers’ market. To give yourself the best chance of selling in any market, location and the type/style/floor plan of the property are critical.
Golden Rule #7 – Check out the local knowledge before you buy.
The best way to do this is to talk to the locals, drive/walk/ride the streets, focus on the main shopping street and shopping centre, have a coffee/meal at a couple of eateries and speak to the police about areas to avoid buying in.
Golden Rule #8 – Conduct a scenario analysis.
Before you sign on the dotted line to purchase a property, make sure you have calculated your figures on a best case/worst case/most likely scenario.
Golden Rule #9 – Only buy the property if you can still make a profit in the worst case scenario.
If the worst that you can do is make a profit, that sounds good to me! It’s pretty hard to go broke if you are making money.
Golden Rule #10 – Do your own research. Don’t take other people’s advice as gospel.
Unless you can find a trusted and qualified property investment advisor, you need to do your own research.
So there you have it! My Top Ten Golden House Hunting Rules. If you want more information on any or all of the rules, click on the links below.
1. Buy the worst house in the best street.
2. Look for streets with redeeming features.
3. Look for improving areas with easy access to the city/beach/facilities.
4. Capital growth is dependent on Location, Land and Looks.
5. Avoid buying near adverse locations.
6. Consider if you could resell the property in the ‘bad’ times.
7. Check out the local knowledge before you buy.
8. Conduct a scenario analysis.
9. Only buy the property if you can still make the money in the worst case scenario.
10. Do your own research.
Happy House Hunting!
Written by Peter Koulizos, university lecturer, author and buyers advocate.