Buying a house can be a daunting experience. As with anything, the first step is always the biggest, and when you learn the most. It’s often only through hindsight you realise how much there is to know and what you might have done differently.
Our property story to date has been concentrated in one city - Auckland. This focus has helped us become experienced in this market, but we are newbies to doing it out of our hometown.
Now having to research in new regions with different property dynamics, supply and demand, economic and local factors. New towns without local knowledge or contacts. In fact, many of the towns we are looking at we have never set foot in! We are starting from scratch, and it is like we are first time home buyers all over again.
Having been a first home buyer before, and now going through a similar experience. We thought would share a few key tips that we’ve applied on our Renovation Road Trip search that might help you out on your own property journey.
Property hunting takes time. Whilst the exception does occur, on the whole there is no comparison for investing time to get a better result (as with anything). I’m sure we have all seen friends decide to buy a house, even get a loan pre-approved - then get frustrated at the time it takes to buy a house (and in some cases giving up). Start realistic - know that this will take time. The more time you have and patient you can be - the better you can research, identify opportunities and know how to be decisive on the right opportunities.
Working with your Bank.
It’s quite important to know what you can afford on a house and have available to spend. We worked closely with Kiwibank to get our home loan, given our situation is unique. Knowing what we could afford to borrow during our Renovation Road Trip and getting a pre-approval. Once we got to this point, we knew we could take our search more seriously. We could now act, putting in serious offers, when we found opportunities. Talk to your bank early, take them on the journey with you and make sure you spend your time searching for properties you can afford.
Working with Agents.
Without doubt, when you are doing this as a rookie you need help. If you know someone knowledgeable that you trust - absolutely get as much advice as you can from them. But you will quickly learn you need to deal with real estate agents a lot throughout this process. They are the experts on everything around buying and selling real estate - and when you know how to utilise their knowledge, they can be a great asset in your search.
But not all agents are equal - they have different approaches and treat prospective purchasers differently. You need to find the agents who will be patient and helpful with you, understanding the time it takes.
My advice here is to enquire personally to a lot of agents, then build relationships with agents from different agencies. Agents you can trust and who will work with you. They can understand your requirements, often will come to you with new listings and help work with you through the process.
Doing the Sums
If you are purchasing a home as a project - you will want to know what your position will be at the end of your renovations. That your investment is well spent and has added value. Even if it is not a project, I would recommend taking time to know you are not overpaying and if you have to sell, you will get your money back. Primarily this is about researching sales prices of comparable homes to become familiar with values. No two properties are the same, so this isn’t an exact science. But the more time you spend doing this, the more familiar you will become about knowing if a house is overpriced or represents good value.
For homes that we plan to do work on, I like to prepare a simple feasibility, with estimated costs, sale price and work backwards to make sure that the price I offer on a property will get the outcome we are after.
Check back against your Strategy
Whilst our personal guidelines around how we are narrowing down locations may not be relevant to most situations, the principle of this article is very relevant. Have a strategy and guideline for what you are looking for and then measure properties against this. To make sure that you are looking at properties that suit your situation and you keep in mind the bigger picture.
To find our property for The Renovation Road Trip, we went into it knowing it would take time. As we are not just looking at one town with fresh eyes, we are looking at several. We started our search early to research and learn - even prior to having our loan pre-approved - as we could not tell how long it would take. In fact it’s been 6 months of investing time every week to follow the advice we have written above. Choosing a handful of towns to focus on and get familiar with. Talking with agents, testing my thoughts on values against actual sales, trying to spot opportunities.
Then when we find homes we know could work - taking it to the next step and putting in offers. Even when you get to this step, it can still take a lot of time. We have tried and missed the mark on lots of properties. It’s frustrating. Its disappointing (especially the cute ones you get too emotional about). But we see this as a genuine step when looking for a property. Missing out makes you realise what is a good buy, and takes you a step closer to your goal.
So if you are looking for your next investment or buying a home for the first time. Before you rush in and fall in love with a house, make sure you take a step back first. Start with a clear idea on the realities of house hunting and keep an open mind throughout.
This blog was sponsored by Kiwibank. Whether you're taking your first step or next step on your property journey, Kiwibank's home loan experts are available to through the process.
Their Mobile Mortgage Managers can come to your choice of location and their Banking Consultants are available at your local Kiwibank branch. Call 0800 000 654 or visit kiwibank.co.nz/homeloan for more information.