Location Land and Looks
Buying a property, whether it is to owner-occupy or for investment, can be an overwhelming process. There are many factors to consider and family, friends and colleagues love to come out of the woodwork to put their opinions forward; warranted or not.
When finances are sorted and it comes time to select a property, keep it simple by keeping three factors in mind: Location, Land and Looks. These are the three most critical factors if you are looking to buy property with greater capital growth potential.
Location
The location of the property is the most important factor to consider because its location will never change. The size of the property can be altered, as can its condition and appearance but where it is located, will never change. For investment properties, being near the city or the sea is very important. Tenants typically seek out rental properties that are close to the CBD for employment or close to the beach for lifestyle. This is especially true for our larger cities like Sydney and Melbourne where renting is a more affordable option than buying a property, in their desired location.
Being near public transport is also a must in these Australian metropolises. Location for purchasers looking to live in the property is just as important but for different reasons. Whilst being next to the city or sea is less imperative, owner-occupiers may wish to be close to work, within certain public school zones or close to their extended family.
Land
The land component of a property is where the value lies. Houses can always be renovated and improved or knocked down and built again but land cannot be created and its finite nature is what makes it so valuable. Land is good for both investors and owner-occupiers in regard to resale value and development potential.
An investor may purchase a property to rent out with a huge backyard. Whilst tenants won’t pay more for a larger yard, the next purchaser of the property will. The investor may also decide to rent the property for a number of years and then demolish the dwelling and develop the land.
This is also true for owner-occupiers. A large backyard would be fantastic for young families but when the kids have all moved out and the yard just becomes too much of a maintenance issue, the owners may decide to subdivide the yard and create a hammerhead (battle axe) allotment. If the block is on a corner and thus offers dual street frontages, this is a much better option for development purposes.
Looks
The appearance of a property is important for obvious reasons. Generally speaking, the more aesthetically appealing a property is, the more it will be worth. Whilst looks can be subjective and tastes of purchasers can differ, the one ‘look’ that will always attract value is character or period style homes. These types of homes, typically built before World War 2, hold a high value due to their charm. Even the character laden properties that need a lot of work will generally attract a remarkably high price.
This is again due to their finite nature; they are not building any more Californian bungalows, Edwardian or Victorian style homes. Whilst it is possible to mimic the period design in new homes, genuine character homes are limited in number across the whole of Australia.
Looks also refers to an outlook. If you can buy a property that has a view, your capital growth potential is enhanced. The best outlook you can have is a view of the sea. The next best view is one of the CBD. A view of the hills or open spaces is also advantageous.
When it comes time to buying a house and everything seems complicated and too hard, just remember the three ‘L’s: Location, Land and Looks!
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