Buying Tips

Excitement, pleasure, pride. These are the feelings that property buying can bring whether it is vacant land, your first home, your next home or an investment property.

Choosing the right home for you comes down to knowing what you need; what you can afford and knowing exactly what’s available at the time you are ready to buy.

Knowing what you need

Although it seems obvious, the type of property you buy should reflect the lifestyle you are planning for the future. Think about such aspects as household numbers, proximity to local amenities, including schools, the sorts of work and leisure activities you like and the length of time you expect to live in the home.

Knowing what you can afford

Speak with our Ray White Financial Services consultant to pre-determine your budget level and perhaps obtain pre-approval from the lending institution prior to going out ‘to buy’. This puts you in a position where you are able to make ‘ a cash offer.’

Knowing what is available

Newspapers, real estate publications, real estate offices and the internet are all good places to begin your search … this web site is updated daily featuring the very latest listings to the market. Each week we post a list of open homes for the coming weekend and you are invited to register on this site to receive automatic notification of properties that may suit your needs.

Knowing local values

Research sales in the areas you are looking into and attend any auctions of properties to help establish current values. Ask any one of our sales people for additional advice … they will be happy to help.

You’ve found your perfect property

When you find a property that suits your requirements, ask the salesperson for sales statistics of similar properties in the area. If the property is to be auctioned, obtain a copy of the auction agreement and send it on to your solicitor. Remember, when purchasing at auction, you must pay a 10% deposit on the fall of the hammer.

We recommend that purchasers arrange a building inspection prior to purchase and also obtain a copy of the Land Information Memorandum report. We also recommend you organise an independent valuation.

Concluding a Sale

Once your offer has been written and negotiations are finalised you will sign a Sale & Purchase Agreement and pay a deposit; usually 10% of the sale price. Copies of the contract will be sent to your solicitor and yourself.

*If the property you wish to purchase is going to be auctioned, please go to our ‘Guidelines on Purchasing at Auction’.

Settlement Day

This is when ownership of the property is transferred to you and financial transactions are completed. Prior to settlement day you may request a pre-settlement inspection of the property to ensure nothing has changed in its status since purchase and agreed chattels are in place.
Once all settlement procedures have been finalised the keys will be released to you.

The home is now yours … congratulations!

But why invest in property?

The great Australian dream is to own your own home.

It is built into our psyche that owning property is something to strive for and be proud of. And today, three out of four properties are bought by owner-occupiers.

Before you start investing in property, however, you need to ask yourself: what is my goal?

Do you want to:

  • retire richer?
  • retire earlier?
  • supplement your income?
  • give up your day job?

Buying the right type of property in the right location will help you to achieve your goal. It is important to establish what your goal(s) is at the outset because it will determine which strategy — renovate, develop or buy and hold — you apply.

But why choose to invest in property rather than the other growth asset — shares? There are many good reasons, including:

  • capital growth
  • rental income
  • hedge against inflation
  • greater degree of control
  • lower volatility
  • high demand
  • Let’s take a look at each of these in detail.

Capital growth
Putting your money in the bank or investing in fixed interest does not give you any capital growth. If you purchase property, however, you do so expecting that the underlying value of the asset will grow. While this is generally the case, you need to ensure that you buy property in the right location to maximise your capital growth. For example, a new house on the outskirts of Melbourne’s metropolitan area bought for $400 000 may grow at 5 per cent per annum, whereas a well-located property in an up-and-coming suburb, bought at the same price, could grow at 10 per cent per annum. In 10 years’ time, the new property on the outskirts will not have even doubled in value, while the well-located property will be worth more than $1 million.

If you had bought the property in the prime location, you could possibly retire in 12 years’ time, based on your increased net wealth; you could not retire on the funds from the poorer performing outer suburban property. Even though properties increase in value over time, it is crucial that you buy in the right location to maximise your returns.

Rental income
One of the benefits of owning investment property is that you start receiving an income almost straightaway. In the current market, you could settle on a property during the week and by the weekend you could have a tenant who will have paid you some rent in advance. With the other asset classes, you often have to wait until the end of your term (in the case of a term deposit) or until your dividends are due, which is usually two to four times per year.

Hedge against inflation
An inevitable part of life is inflation, and the rate of inflation varies according to the strength of the economy. One of the benefits of holding property is that property values increase at a greater rate than inflation. This is great news if you already own property, but not such great news if you are looking to buy property. The important thing to keep in mind is to buy the right property in the right location.

Greater degree of control
Owning property allows a greater degree of control than owning shares. For example, as a share owner you cannot improve the value of your shares. However, as a property owner you can add value to your investment by painting, landscaping or renovating. For a few thousand dollars, you can get much more than that back in added value.

Lower volatility
Although it does have downturns, the property market is not as volatile as the sharemarket. You can sleep well knowing that the price of your property will not plummet overnight, which can happen to shares. Keep in mind also that the security is in the land, not necessarily the building, which makes getting the location right particularly important. As mentioned in chapter 1, land appreciates, whereas buildings depreciate as they get older. The exceptions to this rule are period-style houses, which increase in value over time due to their rarity.

High demand
Everyone needs a place to live. For this reason, property, especially well-located property, will always be in demand. At the time of writing, our capital cities are recording high rates of immigration and a rise in international student numbers. But while demand for property is steadily increasing, supply is unable to keep up with it. If this situation continues, prices are likely to increase sharply in the near future.

Text information supplied and sourced from