• 4. Searching for a new home

    House or apartment?

    The house 

    Freestanding homes usually appreciate more than an apartment. The main reason is simple: land. Size plays its part too.

    In fact, valuations quite often separate the dwelling from the piece of dirt it sits on, 

    And subject to planning or council controls, house owners have quite a lot more freedom and opportunity to renovate or rebuild, as opposed to apartment owners. 

    Plus, there are no restrictive strata bylaws to abide by either (such as having pets and common property/access rights). 

    The payback is in the purchase price

    The cost of buying a house in a convenient area for a first home buyer can be considerably higher, meaning you risk taking on too big a mortgage. Houses can be maintenance heavy and require large sums of money to fix structural problems.

    The apartment

    The most common type of apartment is strata title. This is where you become part of an owners’ corporation, which controls the administration and any funding of common property, all financed by strata fees and levies. Note that the body corporate can impose special levies to carry out maintenance, which can be large.

    The other type of apartment is company title. This is where unit owners effectively buy shares in a private company, entitling these shareholders to exclusive possession of a particular unit. 

    Shareholders vote to decide company rules governing occupation, including rights to lease, sell or transfer shareholdings, which can be quite restrictive. 

    Company title apartments generally cost a little less than similar strata properties because such rules around ownership and disposal limit the number of potential buyers in the market. This in turn can reduce their resale potential to some degree.

    For this reason some mortgage providers are less willing to extend loans on this type of apartment, or may require a lower LVR.

    Advantages of buying an apartment

     

    • It’s easier to look after and maintain than a house. You don’t need to repaint exterior walls, personally tend gardens, look after a lawn or worry about external security. 
    • Affordability - apartment complexes often have bonus features such as a swimming pool, gym and communal barbecue areas. Plus, you may be able to afford an apartment in just the area you want, whereas owning a house in the same area might be beyond your budget.

     

    Disadvantages of buying an apartment

     

    • Apartments come with strata fees and other administrative costs, and depending how well the strata is managed, may add up to quite a hefty outlay each quarter. So make sure to check how much they are. Next:
    • Look at body corporate restrictions and any site-specific bylaws
    • Ask for copies of the latest AGMs and monthly meeting minutes to get an idea how obstructionist or removed the manager is. These may also indicate upcoming repairs that will require a special levy which you’ll be required to pay.
    • Ascertain how much freedom an owner has to renovate, take down a wall, replace carpet with floorboards, add a balcony, as all major renovations will need to be cleared by the building’s body corporate.

     

    Investment property

    If an investment property is your first home purchase, both houses and apartments present viable arguments.

    Families as well as a group of individuals can be potential tenants for either houses or apartments. So depending on the size of your property, the pool of renters in the market is greatly enhanced.

    Smaller properties catering mainly to individuals or couples tend to rent well if located close to amenities such as universities, shops and public transport. 

    Long-term growth potential

    Properties near the water always offer good growth prospects because a wide range of buyer-types will be interested. This also goes for properties in family-friendly suburbs with good schools and cheaper suburbs with ‘yet to be discovered’ potential.

    It’s your home

    Well-meaning friends and family will advise you on what they think is the best option. Yet both houses and apartments can deliver positive returns. What you need to do, ultimately, is consider these things:

     

    • Are you hoping to live in your property long-term? If so, where do you really want to live? 
    • Are you happy with the terms? With a house, you need to maintain a garden and with an older property, you will have upkeep and repairs. With an apartment, you’ll be bound by body corporate rules and strata fees and levies.

     

    What are you looking for?

    This is the fun part! If you’re buying a property to live in, then your needs and desires will dictate what you buy – coupled, of course, with what you can afford. So it’s important to spend some time weighing up what’s really important.

    Light and space

    Light and space are crucial features for most home buyers. Take note of the rooms in your current living environment that you enjoy being in and chances are they have a high level of natural light and a spacious feeling. Look out for sunlight and design/lay-out that creates a sense of space.

    To DIY or not to DIY?

    If buying a home as an investment, are you keen on DIY renovations? If so, then consider whether you’ll be able to carry out the renovations yourself or whether tradespeople will be needed (and to what degree?).

    If you’re not DIY inclined, consider how much money you can afford to pay a professional to carry out renovations. You may wish to budget some or all of your renovation costs into the overall amount you borrow to purchase the property.

    Close to amenities

    Are you happy to drive to the nearest shop, or would you prefer to be within walking distance? Is there a bus stop or train station close to the property? What about schools?

    Being close to amenities is not something everyone needs, but if you’re the kind of person who likes to be ‘in among it’ then this should probably be a priority.

    Kitchen and bathroom

    A standout kitchen or bathroom really makes a difference to a home buyer’s perception of a property. 

    If you’re planning to lease an existing property, keep in mind that families with young children will probably want things like a bathtub, while young couples and professionals might be more interested in a top-notch kitchen.

    Parking

    Consider the type and amount of parking available. If a home has its own car space, that’s a brilliant value-add, particularly if the suburb grows in popularity. 

    If it doesn’t have a car space, you might like to visit the property at different times of the day and week, to determine how easy it is to find a car space. Carrying a boot-load of groceries two blocks can become exhausting!

    Number of bedrooms

    If you’re looking for a home for your current or future family, three bedrooms is generally the preferred minimum. Then when it comes to sell, three-bedroom houses tend to attract a wider market of buyers than properties with fewer bedrooms, because couples and families are both interested in a home with a few rooms. 

    Another option is to look at a one or two-bedroom home with the possibility of extending – either up or out – over the coming years.

    DA approval

    If you’re considering extending a property – say, adding an extra bedroom, you will most likely need to submit a DA (development application) for approval. 

    Before engaging architects, designers or builders, you should check with the local council first to see if a DA is required or not. 

    This is particularly important if the house is heritage-listed or your planned extension/s affects the privacy or sunlight of neighbours.

    Schools

    If you already have children (or planning to), you should definitely look into the number and calibre of nearby schools. 

    And even if you have no intention to have children, keep in mind schools are a major attraction for those who do, should you decide to sell the property at a later stage.

    Living space

    Having a large area in which to relax is a key selling point in a home these days. A lounge room is probably the area in which you’ll spend most time, so make sure you feel comfortable in it and that it’s big enough for all your lifestyle and furniture needs.

    Storage

    Storage space in a home can be essential. If you have lots of clothes, bed linen, bikes or work equipment that needs to be stored, then look for a property with existing (or potential for) built-in wardrobes, cupboards and storage space.

    Views

    The ‘wow’ factor in real estate terms; views can enhance the experience of living and the value of a house or apartment. 

    They don’t have to be of the sea or the countryside – views of the city, a neighbourhood park or an attractive classic building can all add value to a property. 

    Property appreciation and resale value

    Owning your own home is widely regarded as the great Australian dream. Making money from owning your own home is even better. 

    With some planning and attention to detail, it’s possible to not only enjoy living in your own home but to make a profit too. Ultimately, it all comes down to appreciation.

    Real-estate appreciation is the increase in value of your property expressed as a percentage on an annual basis. A useful rule to remember is that if your home increases in value by 10% every year, it will double in value every 7 years.

    Appreciation is good because it brings equity (i.e. value in your home), which means that, subject to your ability to service further loans, you could use your equity as security to invest in other projects, if you choose to do so.

    Even if you don’t plan to be an active property investor, it’s natural to want the value of your investment to increase over time. 

    For reports on property sales in all suburbs, visit Property Value (previously RP Data Australia).

    Factors you can partially control when buying property

     

    • Where and what property you buy are the two factors that usually affect appreciation more than any other. To help assess the potential for appreciation or otherwise, it’s often worth considering:
    • Research - look at recent sales and median prices for similar properties in your suburb. There are many online reports detailing trends: 
    • Size and price - is your property typical for the area and likely to be easily re-sold?
    • Longevity - will you need more/less space in the future?
    • Schools and hospitals - are there good local schools for your family, or the family who might buy your property down the track?
    • Transport - how easy is it to get to work and travel around the local area?
    • Property developments - will you always be trying to sell against newer properties or is the area’s principal use about to change?
    • Views and aspect - check whether there are any planning applications pending that may affect your property.

     

    Factors you can control when selling property

    When it’s time to sell, it’s vital to make a good first impression. A potential buyer is looking at your house because they’ve already decided they’re interested in the area and price range. Now it’s time to ensure your home presents at its best.

    Complete any repairs before any photos are taken or open house inspections arranged. Repairs made before the sale may cost you less than having to discount the purchase price of the property. 

    Put yourself in the position of the buyer and consider:

    The exterior 

     

    • A well cared-for exterior will influence buyers’ opinions of everything else. A fresh coat of paint is essential for that all-important first impression.
    • The same applies for doors and windows; paint them, buy a new mat, make sure the bell works and replace any old or cracked windows.
    • If you have a garden, ensure it’s neat and not covered in leaves or toys. Flowering plants in pots brighten up a property instantly.
    • If you have a garage, make sure it looks as clean and spacious as possible.

     

    The interior

     

    • Make sure the entrance areas are clean and bright
    • Eliminate strong smells well in advance – buyers don’t fall in love with houses that smell of cigarettes or dogs.
    • People like lots of natural light, so open the blinds and curtains. If you don’t have natural light everywhere, make sure the lighting is as atmospheric as possible in all rooms.
    • Floors and walls make up most of your house. Repaint walls in a bright orneutral colour and repair any chips or old skirting boards. Depending on the surfaces, consider a professional carpet cleaner and polishing floorboards and cleaning tiles.
    • The kitchen and bathroom are extremely important – they must be clean, tidy and bright. Rearrange any cluttered rooms to open them up and consider storing excess furniture while you show the house – people like space, not lots of old chairs.