The way you go about choosing a property will identify you as either a rookie or a smart home buyer.
Most new buyers know they should do some homework before committing to a property they are interested in buying, but how much homework does the smart money do?
Sure, you know about home inspections, but do you inspect the materials of the building or the neighbourhood itself?
Property investor and retired valuer Mike Carter says many first home buyers make the mistake of buying a property simply because it’s cute and will ignore whatever flaws it has.
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“First home buyers love cute homes and they just buy pretty homes with no idea of the maintenance and the age of the building. The maintenance of a 1930s house can beat them over the head.”
Carter says he always looks for properties with concrete floors. And those homes with particle wood floors he checks for water issues.
Buyers should check for any leaks and dampness, particularly on the most "vulnerable" side of the house. He says that the north-west side is often exposed to the heat, damp and the cold damaging wooden window frames.
“Wood is not to be mucked around with because it lets the house breathe,” Carter says.
Consider renovation costs
If you don't like the red walls in the building but the flooring and the foundation are in good condition, don’t say no to an opportunity as wall colours are an easy fix.
The less you need to spend to keep the place “alive” – that means in good condition - the better.
Fresh coats of paint, a new carpet or a vinyl are cheap comparing to the value they add to the property in the long run.
Make sure to inspect the materials the building is made of and the quality of that material when inspecting a home.
If you can't do it yourself, be a smart buyer and bring a builder to a house viewing. “Quite often a builder friend is the best guy,” Carter says.
Get a valuation
Carter says a smart buyer would spend $1000 on a valuation to save themselves from $2000 to $100,000 worth of costs down the line, depending on the property.
When the valuer visits the property, go with them and don't be afraid to ask questions, Carter says.
“Spend time with them; ask what they’re writing down and what they are noticing that you can’t see.”
Queenstown Lakes Community Housing Trust executive officer Julie Scott agrees that skimping on a house valuation and a building inspection can end up costing buyers dearly.
Scott, whose organisation helps low income families into their first homes, says: “When people used to buy off market, often the house valuation would come up for less than what was the original asking price. We were then in a position to negotiate a lower price by pointing out what’s in the report.”
Check the paperwork
A smart home buyer will squeeze the maximum amount of information from the real estate agent, Carter says.
“Some buyers think they are getting free advice from someone who is paid by the vendor and not them,” he says.
As a minimum, a buyer should always request a LIM report, a title copy and, if it is a cross-lease property, a copy of what’s called a "footprint" of the lease.
Queenstown real estate agent Kirsty Sinclair says the regulations have changed and to the buyer’s advantage agents are required to provide a lot more information. “Buyers are very savvy now; they read up online and do their own research. Real estate is New Zealand’s favourite hobby,” she says.
Sinclair says often smart buyers don’t need to ask many questions. “They know how to make sense of the information in the documents we provide. They don’t sweat the small stuff.”
She encourages first home buyers to get a lawyer to help them investigate the property documents and do due diligence.
Check the neighbourhood
When going to an open home, smart buyers analyse the area thoroughly and check what’s around. A smart buyer will pick a property with a school and childcare nearby.
Carter says being within walking distance from the shops, train or bus stops is a good position to be in, as that’s what tenants prefer. “Being close to public transport has become very important from the investor point of view,” he says.
Smart buyers don’t just look at what’s around today, they read up on what is being developed in the area, what the local council is planning and how will affect day-to-day living.
Carter advises buyers chat to neighbours and people in the local shops or cafes to find out what it is residents love about living the area and what life there is really like.
