If you’re like a lot of people, you’ve probably been saving up for many years to buy your first property. Whether you’re planning to purchase a home for yourself (and perhaps your family) to live in or want to buy an investment property that you’ll rent out, taking this step is a big one and will give you a huge sense of pride and accomplishment.
However, to make sure your funds are invested in the best way possible, and that your long-held property owning dreams don’t end up becoming a nasty nightmare, you need to think strategically and take steps to plan, prepare, purchase right and protect yourself. Read on for some tips you can follow in the coming months to make your first real estate purchase without too much hassle.
Conduct Research and Put Together a Plan
For starters, don’t just go out and buy the first property you see that has appeal. Instead, conduct plenty of research. For example, examine at least a few different suburbs, to be sure about where you want to buy. Understand how these areas are currently trending and what investment or changes to rules and regulations and other things could affect property values over the coming years.
After that, spend time looking at lots of properties online, to get a good feel for prices and types of options out there. Then, spend weekends inspecting places in person. You will see many things on-site that you can’t see online, such as the real sizes of rooms, the condition of inside and outdoor areas and more.
Once you know exactly what you’re looking for, and the price range your ideal property will be in, sit down and put together a plan of attack for your real estate purchase. To make the best investment possible, try to take emotion out of your decision. A plan will help you with this. For instance, create a checklist of things you want (and definitely don’t want) in a property, and stick with inspecting those that match.
Set a Budget and Stick to It
You also need to set a budget. Lots of people get so excited by the prospect of buying a property that they get carried away and end up buying a home or investment that costs more than they wanted to spend or that requires them to put a lot more work in than planned.
When creating your budget, factor in all the different elements involved in purchasing and potentially renovating/repairing the property. Stick to this budget by only searching for properties that stay within the financial parameters you have set.
Know What You Can Really Afford to Pay
This leads on to the next point: Know what you can afford to pay. Keep in mind that what a bank or other lender will enable you to borrow for a property may be lower or higher than you expect, so make it a point to contact various financial institutions ASAP to find out what amount you can really get access to.
When deciding on your ultimate affordability number, think about more than just the purchase price of a property. While this is the biggest figure to consider, it’s not the only one. For example, you’ll also have various insurances and perhaps a home purchase warranty as well as other costs such as renovations and furnishings; plus there will be things like potential real estate agent costs, inspection charges to ensure the property is in good order, repair or renovation expenses, annual maintenance costs and fees from solicitors and accountants you contact for advice and assistance.
By understanding your borrowing capacity before you start looking at properties, you won’t waste time or get your hopes up about places simply outside of your budget. Always speak with a variety of lenders since they all work differently and will offer different things.
Just because a lender may pre-approve you to borrow a certain amount, this doesn’t mean that’s what you should spend. The figure you decide on needs to be based around what you feel comfortable paying back as your mortgage each month, based on your current and future living expenses. If, for instance, you fear you might be let go from your job soon, or if you know your expenses will increase because of a child on the way or some other factor, it’s wise to leave more buffer room for yourself.