One of the most frequently asked questions I come across is “What makes a good property?”
It is kind of like asking “What makes a good holiday?” or “What makes a good tv show?” in that there is no one-size-fits-all solution, as the criteria for what may resonate with and satisfy an individual’s preferences are so diverse.
What makes a property good for anyone depends on personal preferences, financial circumstances, and their property strategy. But what makes a property good for one person, might not be a suitable option at all for someone else.
With this in mind, here are the 5 key reference points to consider that could inherently deem a property as “good”. A good property is one that…
1. ALIGNS WITH YOUR PROPERTY STRATEGY:
A good property is one that fits your property strategy and achieves what you need the property to do for you. Your strategy should always take precedence, then you can find the best property that meets your criteria.
Regardless of whether you’re buying a home to live in or buying an investment property, your first question should be what does this property need to do for me? Is it one which needs to perform with capital growth? Is it one which needs to provide me with a good rental return?
An ideal property is one that ticks all of your boxes and fulfils your property strategy, so for that reason what makes a good property will be different for everyone according to their unique criteria.
2. MINIMISES FINANCIAL RISKS:
A good property is one that doesn’t carry significant financial risks. You want to ensure that your purchase won’t result in the bank rejecting your application or demanding a higher deposit if it’s deemed as risky.
Pre-approval from the bank is contingent on their assessment of the property’s risk factors. For example non-residential zoning or unconventional titles, factors like proximity to power lines, train tracks, a property that needs excessive renovating or is unliveable, even a particularly small property may also raise red flags.
These properties tend to have limited demand, making resale in the future difficult due to their negative features.
3. HAS GREAT RESALE POTENTIAL:
Resale ability is essentially the level of desirability for buyers and being able to sell that property relatively easily in future when the time comes.
While homeowners may not always prioritise capital growth, the ability to sell a property smoothly and potentially make a profit is a commonly desired bonus.
The key is to select a property that appeals to a broad range of potential buyers and aim to avoid properties with undesirable features such as high traffic noise, lack of amenities, or oversupply in the area.
4. LIMITS SURPRISES AND UNEXPECTED COSTS:
Nobody likes unexpected costs that can put a strain on their finances and a good property is one that keeps these to a minimum. By conducting thorough due diligence from both a building AND contract/owner’s corporation perspective you can uncover any issues or hidden fees and avoid costly repairs down the line.
5. AVOIDS PREMATURE SELLING:
Lastly, a good property is one that doesn’t force you into premature selling due to unsuitability or issues arising from a lack of due diligence. Factors like overspending, poor location choice, ignoring red flags or not prioritising your non-negotiables could all lead to a premature sale and negative financial situations when you factor in further costs to sell the property such as agent’s fees, marketing & styling costs etc.
It is not worth the risk. Always thoroughly evaluate the property against your strategy, involve all relevant parties, and ensure your mortgage is within manageable limits.
So, what makes a good property? Individual situations and preferences aside, these 5 general considerations, in my opinion, are an excellent yardstick for assessing the suitability of a property. By aligning your property strategy with your requirements, minimising financial risks, assessing resale potential, avoiding surprises, and ensuring long-term suitability, you are on your way to discovering your dream property.
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Expert buyer’s advocate, founder of Amy Lunardi Property and creator of of The First Home Guidebook - an educational podcast series and online course that empowers first-home buyers with all the necessary tools and knowledge needed to buy their first home.
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