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In this week’s episode, Dave, Cate and Pete take you through:
How viable is your plan?
- Budget – financial position. Wonderful dream, but if it doesn’t match the budget, you can chase your tail for a long time
- Tenure – is it future proofed, trailing a long commute or farm life. You find out that you don’t like living there or the job wasn’t right.
- You can overshoot the runway and going for the family home when you aren’t even married. Living out in the suburbs when you miss the city which might be ready for you for the next 10 years.
- If you can’t see an easy 10 years, it’s probably the wrong family home.
- Stepping stone home – at least 7 years, real minimum is 5. Plan for 7 to 10 – give yourself time to run through cycles, build up equity or pay down debt or build in the offset account. But you really need to project how will my life look 7 or 10 years ahead.
- You need a plan B – you can delude yourself into thinking your plans will work.
- Often people can only afford to purchase a stepping stone home, unless they purchase it first as an investment.
- You have to assess your dream financially and practically.
How frequently does your dream-home come up for sale?
- In a moving market, you’ve got to ask yourself how often you’ll see a product that will tick the boxes.
- If you know that where you’re looking at what you’re looking for fits the budget, then you know it
- If it’s infrequent, you need to go hard at it when it comes up. If you miss it, and 6 months go by, you’ll be paying more.
- Pragmatic about it – let it go and wait for the next one. Or you may need to put a determine a stretch budget to secure the property.
Sometimes you don’t know what your dream home is until you walk into it.
- If you have so many intricate things that make up your dream home, then just build it. You will get exactly what you want, because otherwise you will never find it. This is not good advice for investment.
- Please don’t turn it into a personal monstrosity that no one else will want. You will shoot yourself in the foot when you try to sell.
- If you put too much money into it, then your emotional premium could blow your budget way out of the water.
How fussy is too fussy
- When looking at an established property, if it comes up less than once a quarter it’s a fussy brief. Less than twice a year is an impossible brief.
- If you can’t see what you want for the last year, it doesn’t exist and you’ll be chasing a mirage.
- If you have access to a property database – here is the brief and get the business or yourself, how many of that type of property has sold in the last 12 months or 2 years.
The risks of chasing a lofty or infrequent dream
- Lost opportunity.
- In a moving market you are eroding your own currency.
- Take a long time to buy.
- Not realistic on price point, it will drag out further.
- You put your life on hold for a period of time and it’s exhausting.
- Chasing the market – cost you $100,000 or more.
- From an agent point of view, you are looking seriously and financed and ready to go, you want the agents to support you. They won’t put time into you if they think you’ll never buy and you don’t give enough feedback on why a property is not suitable.
What is it ok to compromise on and what isn’t?
- Pete would never compromise on location, because that cannot be changed.
- You can change the dwelling, yes it’s expensive to do, but you can never change the location.
- See the dream, what it could be, rather than looking at what it looks like now.
- What you’re prepared to compromise on has to be ok with you. But if the compromise that you choose involves a land issue (south facing, busy road, next to something noisy or yuck). You could buy a bargain, but you’ll sell a bargain as well, particularly if the market is not hot.
- Common compromises
- Land size
- Dwelling make-up
- What are the must haves and what are you willing to compromise on.
- Some people choose to move to the next suburb to get more land size and better dwelling within your budget.
How long tenure should a buyer aim for?
- Buying one home in your lifetime as the holy grail – in and out costs, stability in life. Two is a good result, three is not unusual, but you don’t really want to be going into 3 or more family homes.
How do you start documenting your wish list and action plan?
- Must have vs nice to have – if that attribute isn’t on the property, it won’t be on the list.
- Sold tab – reverse search engine look – 2 or 3 months for what’s sold recently. If the type of property they are after isn’t showing up within their budget, we’ll talk about compromises.
- You need a realistic and feasible brief before you have an action plan.
- Be conscious that your budget could be increased, better to be honest with yourself about this earlier, because you’re less likely to chase the market. You put a limit on yourself to save money, but in the end you cost yourself money.
What are the things that can future-proof a purchase?
- Think about your needs, not just now.
- Think about the space, land and amenity that you need.
- What will it feel like if you have children and your family is not nearby.
- What can you achieve in your lifestyle that you don’t necessarily need to pay for – zoned schools or parks so you don’t need to have a big backyard.
- Public transport should be a consideration too.
- If it doesn’t suit your needs now, is there development potential? Are there other properties in the area that have gone through an extension?
- How does your long-term family home help to keep your life simpler?