When buying a home or an investment property, it can be effortless to get caught up on everything you love about a home or unit and forget to look at some of the potential issues.
The most apparent issue you’ll run into with a property usually surrounds structural problems. These would be cracked foundations and issues with cracks in the walls, water damage, or even termites. The other major one is often the roof. Small things that cost a lot of money to fix.
For the most part, these types of things will be identified in a building and pest inspection, so it is always advisable to have that included in your offer. If buying at auction, it will be your responsibility to take care of this before auction day.
Air Con & Hot Water
Again, these are both relatively apparent problems that you can get checked out before the purchase. In the case of a ducted air con system, this can run into the tens of thousands of dollars to replace, so it’s worth having it inspected before purchase. Similarly, hot water units only last a certain amount of time, so it might be worth factoring in the replacement costs if the system is old.
With TV shows like ‘The Block’ that highlight quick renovations, most people are familiar with the things you can do to spice up a property. Unfortunately, in many cases, you are just painting over the cracks. Things like painted tiles in bathrooms are not likely to last for any period. And while the paint job might look nice, you’ll likely have to deal with it down the line. For the most part, this type of quick reno should be a red flag, or at the very least a warning that the property will likely still need work.
Public Housing Nearby
While you might have found a property that ticks all the boxes, it is also worth paying attention to the neighborhood. If there is public housing nearby, this can significantly impact the value of a property going forward. So much so that it will likely considerably underperform all things being equal.
It’s possible to use tools such as realestateinvestar.com.au to scan the neighborhood for homes owned by the various state governments for public housing.
High Strata Costs – Hidden Fees
If you’re choosing to buy a unit or apartment, people can often overlook the high strata costs that come with owning the property. If you buy into a building with things like swimming pools and gyms, the prices are usually very high.
Similarly, most strata’s have what is known as sinking funds, which put money towards large projects that might arise in the future. They also will, at times, have significant capital works projects on the agenda. Especially in older buildings.
Be sure to get a copy of the last few minutes of the strata meetings and review them. You can also order a strata report, where a professional will identify any potential costs you might be forced to pay going forward. If you’re buying a unit, the small blocks (four or less) don’t always have strata fees attached to them and can represent good value.
These days any property that can be subdivided or developed is often marketed as such. The only problem is that sales agents often make mistakes or don’t know how the various zonings work when acquiring property.
If a property is being marketed as one that has ‘development potential’, it’s up to you to confirm that this is true. Often, these blocks are more expensive, so it can be an enormous mistake to buy something that ultimately can’t be developed or subdivided, even if that wasn’t your initial intention. Speak to a surveyor prior or include that as a term in your offer.
Location of Services
One of the most common issues property owners face is not knowing when essential services like water and sewers run. If you buy a property and want to extend or even build at a later point in time, you must identify that these services don’t interfere with those plans. For example, if water mains run through your backyard, you won’t be able to build over the top of them as they need to be accessible.
One of the most important takeaways when looking at all these problems you might find is that none of them means the property is not viable to purchase. If you identify a problem ahead of time, you are well within your rights to go back to the negotiating table.
You’ll be in a powerful position if you’re prepared to take on a problem property that you know you can fix. You might even be able to use these problems to secure a bargain.