From my perspective as a Mortgage Broker, I’m seeing all avenues of Home Ownership these days.
To buy, build or renovate are generally the choices for those in or entering the property market. Obviously there are pro’s and con’s with all three but I hope to shed some light on what you might consider when looking at these options.
Obviously, cost is a fairly major issue. I see so many people falling in love with the idea of building who really have no idea as to the full cost from building a house to actually having a finished home.
The differences can be massive, and to a First Home Buyer especially who doesn’t have the extra money to finish the home, the lure of credit cards and interest free plans can draw them in to mountains of high interest debt.
The same applies to current home owners also.
Buying established is certainly good value for money at the moment. There is an abundance of stock on the real estate market making for plenty of choice and negotiability on price. Whether its buying that ready to walk into home or buying something with potential down the track, at least they are generally a fully finished home making for a lot less extra cash outlay… in the short term anyway.
Land is still fairly abundant in Australia and especially in Western Australia so both are real options. If you wish to live in certain areas without land options then you have no choice but to buy. That said you can still, as the old real estate adage goes “buy the worst house in the best street” or the “best house in the worst street”. The choice is yours in the end.
From a money making standpoint, location and land are the key areas. Houses actually go down in value but the land they sit on goes up in value. This means location is important.
You’ll notice many renovating shows on the television these days. I’m seeing it progress in popularity as it can be far cheaper to even stay where you are and renovate what you have rather than spending a fortune selling your house then buying another. You could easily lose $10-$20,000 in selling costs then the same again if not more buying another house. Would have just been better to spend that money on the house you have.
Another issue with renovators is under budgeting. Most renovations budgets blow out and blow out substantially. Make sure you have your figures right. Work on a worst case scenario and even then add in a buffer of at least 20%… you’ll be shocked how often it happens.
In the end, as with anything. Get your finance sorted first so you know what you can and can’t do in real terms then you can move forward knowing exactly where you stand.