Buying a property can be the most exciting time and also the most stressful time. The reasons for this are varied. Exciting because you walk into a property and you can see the life that may be yours once you purchase. You can see yourself living in it. You have already placed your furniture before you even own the property. We have all experienced this. When I was looking for my own home and after a long search and many viewings of properties that were just ok I remember walking into the home we now own and telling my other half – I want this house, we need to get it! My forcefulness may have been due the fact that I was 8months pregnant and the hormones kicked in but I knew I wanted this home even before I walked in the front door. At this point the stress set in. Are we paying too much? Can the property accommodate our family? How can we add value without over capitalising?
Getting into the property market sometimes means starting with a smaller property, with the aim to add value and use if to upgrade to a bigger property or family home at a later stage. Many of us go through this ‘upgrade cycle’. This home formed part of our upgrade cycle. We were about to sell our smaller property to buy our family home. The aim when using a property to upgrade means you need to make sure that you buy the correct property that would allow this to happen.
Once you have determined the location and have identified properties that are of interest your focus should be to look at what each property has to offer in the long term. What I mean by this falls under what I refer to as the Property Potential category. I have applied the themes in this category to every property I have purchased.
As I walk into a property my training in architecture takes over and this means I automatically can see what the property will look like when we decide to carry out alterations and additions and how we can add value. The key things to consider when you walk through are:
• Council regulations – Is the property in a conservation zone? Is it heritage listed? What is the zoning classification? Floor space ratio? Has the property gone through recent renovations and if so do they have council approvals? What other developments with approvals are in the area that can impact your home? The only way to be armed with this information is to talk to council, look through the Development Control Plan and the Local Environment Plan. This is time consuming however, essential in order to understand what you are buying and its potential for value add.
• Structure and layout – Look past the décor as this is cosmetic only. Can the layout be transformed to open plan? This is very common for older properties that generally have floor plans made up of small individual rooms. Can you go up into the existing roof space or is the only way to go up to replace the roof? Many properties have valuable roof spaces that are under utilised and can easily be converted to liable valuable space that can help add value to the property. Will a future floor plan provide a good flow between the different living spaces?
• Future value add – So, how is this determined? Understand what you want the property to do for you now and also in the future. Are you thinking of living in it and renovating at a later date? Or are you planning on renovating straight away? Whichever your situation you need to understand the options for adding value. Some may be straightforward whereas others may require a more trained eye to determine feasibility. Does the local market allow scope for your improvements or will you be overcapitalising? If you plan to sell at some point in the future, the buyers at that time may have different requirements to you.
A Pre-Purchase Design Assessment can provide invaluable advice about a property’s potential. If your goal is to add value it could save you from buying the wrong property. When the right property comes along it will give you the information you need to proceed with confidence. Like a Building and Pest inspection, you should consider making it part of the process you follow for every property you purchase.