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Buyers In Knots Over Balancing Investment-grade With Homely

Buyers In Knots Over Balancing Investment-grade With Homely
3 min read

Buyers In Knots Over Balancing Investment-grade With Homely

Homebuyers often face challenges when trying to strike a balance between 'investment- grade' property and a home that meets their criterion.

Homebuyers often face challenges when trying to strike a balance between ‘investment- grade’ property and a home that meets their criterion.

While everybody likes to think that they will enable themselves ‘outperformance’ capital growth, it is often a very difficult balance when location counts. Homebuyers who overlook the importance of suburb selection, proximity to family, friends, schools, work and sheer practicality can find themselves going in circles when it comes to finding the right home.

Some are disillusioned with the suburbs that are within their budget’s grasp, while others battle with the desire to ‘add value’ when their lifestyle least allows it. I’ve seen couples who have had spreadsheets with ridiculous numbers of data points, renovator/developer plans that exceed the buyer’s financial resources, ‘flip’ strategies without any sort of feasible strategy, and unfair expectations of what their budget could deliver them.

There is little point in idealising about a 2010 price in a given suburb when the year is 2018.

We all like the idea of a bargain but some of the worst mistakes I’ve seen homebuyers make over the years hinge around the confusion of investment-grade and home.

Aside from the difficulty in separating personal needs from investment principles, many buyers unwittingly frustrate their partners during their ‘search for perfection’ too. A partner who doesn’t recognise the reasons for their loved-one’s rejection of most properties can feel like a shopper’s black hole, and without the ability to explain their quest for perfection to their partner, the lack of traction on the home-hunting front can create upset for the best of us.

Many buyers feel that the weight of the house-purchase decision rests with them, and the pressure to identify a perfect, 100% scoring asset grips them with such intensity that it’s impossible for them to make a confident purchase decision.

The reality is that the scorecard is quite different when it comes to homes.

Adhering to wise investment criterion is still important, but modelling a purchase based on an investment-centric model can unravel a successful home purchase.

First and foremost, buyers need to recognise what they need. The essential place to start is often location. Work, schools, family and friends play an integral part in our home selection checklist, and this is often coupled with the need to identify size, layout, number of bedrooms and yard size. Some buyers can thrive with a renovation while others rock in the corner at the mere thought of lifting a paint brush.

The most critical aspect to a realistic home search requires a match of budget to desired property. If buyers find themselves languishing in a marketplace where their ideal home is outside of their budget, they need to readjust their search parameters.

Often a ‘capital-growth’ driven buyer will struggle to come to terms with this adjustment and will consider a compromised option.

Main road addresses often excite buyers because the listed property price will reflect the disadvantaged location. For buyers who are aspiring to secure a property that is typically priced above their budget in a given area, a main road address could be their ticket for entry into that postcode due to the relative discount on offer. For investors, we steer them clear from such compromises because they can never change this flaw.

For homebuyers, we ask them three questions:

  • Can you live with the road noise?
  • Can you safely pull into your drive, and can you easily drive out?
  • If you buy a bargain, one day you’ll sell a bargain. Are you OK with this?

Some capital-growth driven buyers will opt for properties that require more work than they can muster, and the downside of this is that they could either live to regret their decision or worse still, put their partner and/or family under more stress than they can cope with.

Other regrettable situations can often result in a homebuyer delaying their purchase under the false expectation that the ‘perfect’ property exists, and in a moving market this can represent financial loss.

Recognising the importance of a self-satisfying, long-term option for happiness is important. Life isn’t all about making money and a home shouldn’t be all about capital growth. It should be about being proud, well located, and happy.

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