Buying a property is a very exciting moment, but at the same time, it is no small feat – in fact, it is probably the largest financial investment most people will make in their lives. Depending on the purpose of the purchase, whether you are looking for a new home or you are to try your hands at property investment, you will be looking for different things in a property, but in either case, you want to avoid risks as much as possible and ensure that you are making a purchase that will pay off. When talking about such a large investment, there is no room for mistakes. So, to help you out, here are a few ways to avoid risks when buying a property.
Make sure you are pre-approved
Getting pre-approved for a loan should be the first step on your journey to purchasing a property. It is important to get this done early for several reasons. First of all, this will allow you to know your budget exactly, which is quite essential in your property search. Moreover, with a pre-approval, you can be confident that if you find the right property, it won’t slip through your fingers because you have already made the necessary arrangements. Besides getting pre-approved for a loan, you should also be aware that you might need to get your selected property pre-approved by your lender as well, later on.
The location is priority
Something that is universally true regardless of whether you are buying a property for yourself or for investment is that the location is the most important factor to consider. It’s the one thing about a property that cannot be changed, so rather than a great property at a bad location, a property that needs a bit of work at a good location is the way to go.
While it could be difficult for someone without much experience to identify these, the best properties for investment are those that are located in neighbourhoods that are showing growth and are about to become popular places for young families. With properties such as these, the risk is low.
Do thorough inspections
Purchasing a property, especially if it is to be your and your family’s new home, can be an emotional journey. However, don’t let subjective thinking control your moves. No matter how lovely a home looks and how perfectly you can imagine your family living in it, there is no good excuse for skipping essential inspections and running into a purchase headfirst. A building inspection is vital as it will tell you if there are any problems with the structure or things like the wiring and the plumbing.
If it is an older property, it is possible that repairs will have to be made, and in that case, you want to know in advance how much those repairs are going to cost you approximately. A building inspection will tell you that so you can calculate if the investment will still pay off. Besides a building inspection, a pest inspection needs to be conducted as well.
Be aware of the hidden costs
What many first-time buyers fail to factor in from the get-go are all the “hidden” costs that come with buying a property. The costs of this purchase go way beyond the price tag of the property. We just mentioned inspections, which also come with their own price, but they are not the only additional expense you have to be aware of. Even after the seller has accepted the offer you have made and you close the contract, there is an additional closing fee to be paid. Add to this insurance, taxes, and possible repairs that have to be made upon purchasing the property, and the risk of not being financially prepared for this investment becomes evident. You risk losing the perfect property if you don’t factor in all these hidden costs beforehand, so make sure you don’t miss anything.
Bring in a lawyer
Purchasing a property involves large financial investments and we just talked about all the hidden costs that you have to keep in mind while juggling this huge endeavour. Considering that this is all quite complicated and the world of contracts is foreign to most people you should seek out professional advice on the matter. Simply put, you should not sign any contract you do not fully understand. A local lawyer will be able to provide you with great legal advice and might point out hidden risks in the contract, so for instance, if you’re from the sunny Sydney, look up trustworthy Northern Beaches lawyers to help you out. Don’t try to save money on this front.
Keep it realistic
Purchasing a property comes with a lot of budgeting and it’s important to remember what you can afford. It can be tempting to look at properties that are just a little out of your budget, but you are just wasting your time and potentially missing out on opportunities that could be just right for you. So, don’t raise your expectations higher than what’s realistic for your budget because it will leave you disappointed. Moreover, if you are new to investment, it’s better to aim lower than to stretch your budget to the maximum.
Avoiding risks completely is impossible, but to make sure that you have the best possible chances of making the right choice, follow the aforementioned pieces of advice. When it comes to real estate, it truly comes down to research.