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Location or property: the art of compromise

Location or property: the art of compromise

It’s the classic issue that many buyers battle with and unfortunately it often usually results in a long delay in buying and it also makes the process frustrating rather than exciting.

You’ve got a budget, you know where you want to live, you know what sort of property you want to live in. That’s all well and good but usually there has to be a compromise.

Buying a home is an emotional process and many buyers have trouble thinking objectively. The first step is being realistic about what you can afford. Don’t stretch the budget so far that you’ll put yourself in financial hardship. Who wants to live life without having enough money to buy the nice little things when we want them.

Pay less attention to the total amount of the home loan and focus on the repayments. Add a significant buffer for interest rate rises, say at least 1% from where we are now, then set your budget for buying.

Next, the property and the location. Usually, you’ll have to compromise on one. Location is everything in real estate – a great house can be created, a poor location will likely never change.

Classic mistakes to avoid include:

  • Buying on a noisy main road in your favoured suburb
  • Buying the best house in the worst street
  • Buying property next to undesirable infrastructure, such as a petrol station
  • Buying too far away from work so you can live in a big house while suffering a long daily commute

Options to consider

  • Buy an apartment instead of a house. Many families live in apartments these days, sometimes due to affordability but sometimes due to simple choice. Apartments are no longer the poor cousin of houses. Don’t dismiss them.
  • Sacrifice a bedroom. This will bring the purchase price down significantly. A good trick is to check floor plans. Say you want three bedrooms. Look at ads for two bedders and check the floor plans and copywriting for mention of a study or separate studio in addition to the two designated bedrooms.
  • Renovations. Consider what renovations you could do to make a property more suitable. Buying the worst house in the best street is often a smart move.
  • Swap areas, not lifestyle. You may have your heart set on a particular suburb because of the lifestyle it offers. But there are many other suburbs that might offer the same lifestyle and in this case it may be worth “compromising” on the location. Just as long as you’re swapping a good suburb/area with another good suburb/area. A great example is the huge migration of buyers from Sydney’s Eastern Suburbs to the Inner West. Both regions are 10 minutes from the CBD with a strong café culture, entertainment, parks and good schools. The only big difference is the price. RP Data says Leichhardt’s LGA median house price is $852,000. Woollahra’s median is $1.16M. You do the math!
  • Look next door. You’ll be surprised how much you can save by considering the suburb next door to the one you want. Take Manly and Queenscliff on Sydney’s Northern Beaches. Both great suburbs with their own beaches and within a five minute walk of each other. The median apartment price in Manly is $675,000. The median in Queenscliff is $600,000.

If you’re still having trouble, consider talking to a reputable buyers’ agent. They know the suburbs of your city intimately and should be able to suggest other suburbs that suit your price range as well as your lifestyle needs. If you can afford to hire them, they’ll even find the right property for you.


Author: John McGrath
 

 

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