Buying your first property can be daunting, especially if you have literally no idea what you are doing! However, if you remember that everyone else who bought a property started from the same place, you won’t feel like such a pioneer. Breaking down the process into manageable steps will also help. When researching the property market, the key is to allow yourself enough time to make informed decisions and be realistic in your choices and budget.
1. Know Your Budget
Don’t even so much as walk past a real estate agency without knowing exactly how much money you will have to spend. Crunch your numbers, talk to your bank or preferred lender, explore a few options for home loan products that are available to you and be clear on what your budget is going to be. Factor in all of your everyday expenses, plus the additional cost of the mortgage and maybe a little extra each month to budget for the property’s maintenance needs.
In many cases, the budget you come to and the location you choose, will inevitably narrow down the type of property you will be looking for. The closer to the CBD you get in most Australian cities, the smaller and more expensive your property will be. You may picture yourself in a cute single-fronted weatherboard terrace house, but if that house is in inner city Melbourne, it’s actually just a studio with a bed that pulls down from the wall.
3. Understand Your Investment Goals
It’s easy to get distracted by funky apartment blocks and gorgeous houses with picket fences but you must stay grounded and focused. Talk to others about their financial plans, speak to some real estate agents or find yourself a good financial planner to help you get started.
If you have a long-term strategy in mind, the type of property you are looking for will be clear and the path straightforward. Know what it is you want to achieve today and in the future, and you can avoid riding too many emotional rollercoasters in the lead up to purchasing.
4. Start Exploring
Now that you have your budget and the kind of property locked down, you can start to see what your options are. The most popular starting points these days for home buyers are sites like realestate.com.au and domain.com.au, or the search page of yourpreferred national real estate agency. You can start out broad by doing a search in the state you want to live in and just setting your budget as the maximum price, or you can add a few specifics such as the type of property and number of bedrooms.
Once you have a good sense of the options, you can start to refine your choices – adding things like number of bathrooms and car spaces, or features such as floorboards, fireplaces, balconies and swimming pools. If you’re search is still delivering plenty of results, you can drill down even further and search by location. If you come up with no results then your dream neighbourhood needs a rethink. If your search still delivers thousands of results, try to make a shortlist of your top 5 or 10 suburbs and search within them.
It’s also worth doing some research about your prospective suburbs for things like demographics, facilities, local amenities and crime rates. There may be a specific reason that property is so cheap in the area you’re looking at and it might not be one you’ll like.
5. Expand Your Horizons
This will happen organically to some extent, but start to incorporate things into your life that will help you learn more about real estate, property markets and financial planning. Many cities regularly host free seminars about property investment and you will find as soon as you start taking about it to others in your social circles, conversations will flow as others share their experiences with you.
There is also an endless stream of content out there for you to access – from TV shows to podcasts, radio programmes to specialty books and magazines. Head to your local library and dig up some resources on property investment for beginners. Once you have a sense of what works for you, go out and buy some key resources that you will use long into the future.
6. Hit the Streets
Now that you’ve done all the ground work, it’s time to start shopping! Hit the streets and go to a lot of open inspections. Talk to the agents on duty about the local market, what kind of interest there has been in that property and whether there are any similar properties coming up that might suit your needs. The more an agent knows about what you are looking for, the better equipped they are to help you.
It’s a good idea to attend a few auctions too (keep your hands firmly in your pockets though!) This helps you understand what other buyers are looking for and what kind of competition you might have if others are looking for similar properties to you.
Finally, try to learn a little about the neighbourhood from those who know it best – the locals. Try not to seem too creepy and weird but strolling through the neighbourhood on a Saturday morning or a weekday after school or work allows you to experience the atmosphere of the neighbourhood. Do the neighbours talk to each other when outside? Are people busy in their gardens? Maybe they’re outside walking their dogs or giving the kids a run in the fresh air? Or is everyone hiding behind dark windows and strange barricades with chunky padlocks on fences and gates?
Becoming a property investor is a little like starting your own business. There are a lot of things to be learnt and you’ll have to work hard in the early stages to teach yourself what you need to know. Once you have the foundations in place though, you’ll be ready to buy your first property and maybe even make some improvements to it if you can afford it. Then you can buy the next one!