I would like to revisit the issue of buying your own property because the list of things to be considered cannot be easily exhausted.
There is a lot to consider before you choose what you really want.
You should never rush to put pen to paper if your mind is not made up or you are happy with what’s on offer.
One key question you must be able to answer before committing is: why are you buying?
By this I mean are you looking for a home to live in or are you looking to invest in property to obtain a monthly income (net rental income) or looking at the longer term to get an increase in price or value (capital gains)?
When you are buying a home to live in, you buy with your heart, and when you buy a property as an investment, you buy with your head.
That in essence means for your own home you buy what you like, whether it is the best value for money or not.
And when buying as an investment you mustn’t be emotional about the whole process and buy what gives you the best profit.
Think of it like buying a car. A car for you might be a Lamborghini but for an investment you would go for that truck for your business.
The next important question will be: what sort of property are you looking for – a house, a flat, a townhouse or an empty stand?
You should know what you are looking for before you go around looking at property.
How much can you afford?
Do you know what bond you can get?
Do you know what the transfer and bond costs are?
Do you know what your bond payments, rates and taxes, water, electricity and levy will be and can you afford it?
Where do you want to live or not? It does not help to look at property in an area that you don’t want to live in.
Do you know when you will be able to buy? Again it does not help to look at property if you only intend to move in when you finish varsity at the end of 2021.
Can you handle fixing up or do you need the perfect home? Some people can buy an old broken-down property, fix it up and resell it to make a profit, others cannot.
You can make good money by fixing up old property and reselling them – if you know what you are doing.
Are you working with the right estate agent?
Do they have enthusiasm, knowledge about property, are they helpful and up front or are they just interested in the sale?
Are they explaining the process and asking the right questions?
Do you feel comfortable with their advice and trust them?
You don’t want to buy a property and then fail to pay the levy, bond, rates, water and electricity.
The following are some of the questions you need to answer when buying sectional or full title property:
- What is the name of the complex and how many units does it have?
- What’s the levy, the rates and the taxes?
- Who are the trustees?
- Who is the managing agent?
- Can I see last year’s annual financials or audit report? (get somebody knowledgeable to explain it to you)
- Can I see the current financials (monthly income and expenses report) to see what money the body corporate has and who owes it for levy, electricity, water, etc? (if you think the outstandings are too high be careful)
- Ask if there are any special levies.
- Ask what the long-term reserve is for painting and waterproofing especially.
- Ask who the managing agent is and ask around other buildings that they manage to see if they are good managing agents or not.
- Ask to see the building’s electricity and water accounts to confirm if they are up to date – you don’t want to pay the arrears for people who should have paid long ago.
- Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.