Archive for category: Buying

Can’t Decide Whether to Rent or Buy? Try the Rational Approach

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redhouse with paper and pen

Are you looking for long-term accommodation but cannot decide if you should rent or buy? If you favour an apartment over other dwelling types you have already made the first decision, so all that remains is choosing between buying and renting.

Look at Both Sides of the Issue

Like every major life decision, there are pros and cons for both, but sometimes, people prefer to rent because they are not ready to commit to home ownership. It is helpful, therefore, to take a rational approach to the issue of renting vs. buying by examining both sides.

Pros of Renting – Flexibility

Apartment living for renters offers flexibility as tenants can move around to different locations whenever their lease expires. This is a great option if you have moved into a building where there are problem neighbours, or you are not ready to put down roots.

Fewer Upfront and Ongoing Costs

Renting is cheaper than buying with no large deposit required; it is just the standard bond and rent in advance. This enables tenants to choose a rental close to inner city locations to take advantage of the employment and lifestyle opportunities on offer. Also, there is no maintenance or ownership costs as these are paid by the landlord.

Cons of Renting – Uncertainty and Lack of Privacy

The biggest disadvantage to renting is uncertainty. Good tenants often have to leave locations that tick all their liveability boxes when their tenancy agreement expires and may have to settle for less suitable apartments.

They must allow their property manager or landlord access, by mutual arrangement, to their apartment several times a year for inspections. While there are laws that protect the rights of renters, the fact is they are not the owners and will always be paying rent without accumulating an asset.

Pros of Buying – Ownership and Stability

One of the pros of buying an apartment is that, although the entry costs are much higher than renting, and provided the mortgage payments are made, the home loan will eventually be paid off. This will leave the owner with an asset of substantial value.

Owners have the stability that renters do not and only leave their chosen location if they decide to sell or rent out the property. If they sell, they can buy elsewhere, or if they become landlords, they have an additional income stream.

Cons of Buying – Up Front and Ongoing Costs

Buying an apartment involves saving the required deposit and taking on a mortgage that must be paid regardless of life circumstances, such as losing your job. Home buyers are also responsible for ongoing costs such as insurance, rates, utilities and maintenance.

At Bunbury Real Estate we believe there are no right or wrong answers and both options are equally suitable depending on circumstances. Either way, we have the experience, market knowledge and professional staff to help people find their perfect home.

Choosing the Right Property – Emotions Vs Practicalities

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aerial view of neighborhood

The current health pandemic is causing disruption nationwide across most parts of the economy and the real estate sector is no exception. However, there are still buyers in the market in encouraging numbers. Their first key decisions are the preferred location of the new dwelling and whether to buy a house or an apartment.

Houses vs. Apartments – Pros and Cons

Traditionally, Australians preferred houses with generous yards, but as housing costs outstripped wages and the workforce tired of the long, daily commute to the suburbs, apartments came into favour, especially in inner city areas. There are pros and cons for both, and the proliferation of apartment blocks has given buyers more scope for choice than they had in the past.

Does a House Suit a Larger Household?

As a buyer trying to make this decision, there are a few things to consider. The size and composition of your household is one of the most important. If you have an extended family living with you, as well as pets and all the usual trappings of a group, a house is most likely your best option. Space in these situations is at a premium, so your own block of land to accommodate vehicles, hobbies and room for everyone helps to create harmony.

Apartments are Low Maintenance

While a small household with minimal possessions may also buy a house to accommodate future family expansion, they are equally likely to prefer an apartment. Many come with access to off-street parking and storage facilities, and the body corporate usually maintains the common areas. Apartments with at least one balcony also give owners the option to have a small vertical garden for those with green thumbs.

Our sales staff at Bunbury Real Estate can accommodate both types of buyers. We have the local knowledge and professionalism to listen to the needs of our buyers and find them the right property for their situation. Communication with our clients is our strength, so we don’t waste their time taking them to inspect properties that are not what they have requested.

Two More Issues – How close are Services and Lifestyle Preference?

There are two other issues important to both types of buyers. One is the proximity of their desired property to work and essential services. The second is about how the household lives in the dwelling. Do they like getting outside in their own space to unwind or prefer to draw the walls of their dwelling around them?

Emotions often get in the way of good judgement when buying a home. Buyers may have to choose between a house or an apartment, based on factual issues such as proximity to services and lifestyle preferences. Which one is more practical for your situation?

New Home Building Does Not Need To Be Wasteful

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By the beginning of this century, building trends, consumer demand and an abundant supply of land saw the size of the average Australian family home balloon to among the largest in the world. With the threat of climate change now closer than previously thought, home owners are looking to reduce their footprint on the planet and to embrace sustainability when designing and building new homes.

Can Traditional House Plans Deliver a Sustainable Dwelling?

With all the best of intentions, just how does someone without the funds to engage an architect go about designing a sustainable dwelling? There are several relatively simple ways to do that while still working with traditional house plans, resulting in an energy-efficient home built around renewable resource principles such as passive design.

How Does Passive Design Work?

In this model, the building utilises local climate and site conditions to keep the home at a comfortable temperature, reducing the need for artificial heating and cooling. The placement and orientation of the home on the block of land is critical. For example, a house design utilising the northern aspect harnesses the power of the sun, with shading and overhangs to limit sun exposure in summer, while allowing for the sun to flood into the rooms during winter.

Here at Bunbury Real Estate, we are seeing many examples in new housing estates of this type of thought and care now being taken. With home buyers looking to buy existing houses, we get regular enquiries regarding features such as rainwater tanks and the possibility of using grey water for lawns and gardens.

Solar Power Still a Favourite

Renewable energy is the next obvious choice for a sustainable dwelling. Solar power is the most widely consumed renewable energy source in Australia and with the cost of storage batteries falling rapidly, it will soon be affordable for the excess solar energy to be stored in household batteries. Even without batteries, householders are already selling their surplus power back to the grid reducing their energy costs.

Don’t Waste – Recycle

For an even more sustainable home, some builders are using recycled building materials in new home construction. Materials such as aluminium use large amounts of energy to create but can be recycled time after time and fit well with modern décor. Home owners are also requesting that only plantation timber be used in their dwellings, keeping old growth forests intact.

Getting Used to Smaller Homes

There are many more techniques being used, but the most interesting one for Australians is the trend to building smaller houses. Not only are these more affordable, but they consume less building materials, are less expensive to run in terms of energy costs, and with clever design, can still give us the lifestyle to which we have become accustomed.

Buy or Rent Property? Or Do Both at the Same Time?

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Housing affordability is an ever present concern for many modern day Australian citizens. This is why the first thing on their to-do list is determine whether to rent or buy.


Of course, for many there is only one decision to make, which is rent, because they don’t have the huge amount of deposit required to enter the property market in many Australian cities.


But there are also many who believe that home-ownership makes the most sense. Rent money is a waste as it’s not an investment. All you’re doing is paying someone else’s mortgage.


To those who are still undecided, which is the best way to go?

 

Rent or buy?

Both options have their pros and cons. In the end, it is up to you whether to rent or buy, depending on your current personal and financial situation.


Renting gives you flexibility because as a renter, it’s easy to move from one home to another and from one suburb to another when your lease ends.


Signing a lease is a cheaper alternative to purchasing a home. Many young professionals cannot afford to buy in inner cities and near city locations where the lifestyle they prefer and career opportunities are easily accessible.


It’s true that rents are increasing. But it is also a fact that rental payments is usually higher than the monthly mortgage repayments they’d pay for a comparable property.


In addition, there are many costs associated with buying and selling property. There are agent’s fees, advertising fees, stamp duty, government fees, loan establishment fees, etc.


The biggest advantage of renting is that it is not your responsibility to pay for the cost of expensive maintenance, repair, insurance premiums, and more that comes with owning your home. These ongoing expenses are the responsibility of the landlord.


As for the drawbacks of renting, renters don’t have a say with regards to how long they can stay in the rental property; it is the landlord’s decision. This can be extra tough if the renter has become fond of what they consider their home.


The home you’re renting is never your own. You can’t make upgrades to the rental property, or even hang even something as simple as a wall art, without your landlord’s permission. Plus, the landlord or property manager can enter your home, with proper notice and with good reason, for things like regular inspections.


The major factor worth considering is the rising cost of rent. Renting may be the cheaper option now, but rent is constantly increasing in time with the rising value of properties.


You will pay rent as long as you are renting. In contrast, paying mortgage typically ends within 25 to 30 years.


There is a feeling of constancy and stability if you’re living in your own home. You can make whatever upgrades you want; you decide how long you stay there (as long as you’re faithfully paying your mortgage repayments; and you build great equity.


Consider owning while renting

There is a growing trend in the property market, especially among young buyers, called rentvesting. This is a property investment strategy in which you continue to live in a rental property while owning another property that you’re renting out.


The difficulty of getting into the property market experienced by many first-home buyers due to housing affordability has given rise to rentvesting. It provides a solution if you want to live in an area where homes carry a hefty price tag. You rent an ideal home in the area you prefer and purchase a property in a suburb where prices are within your reach. You rent out the property to help you cover your own rental payments and later sell it for capital gain.  


The beauty of being a renter investor is that it’s a way for you to own property while renting in an area close to the city where the jobs and all amenities are easily accessible. You can enter the property market sooner through rentvesting. Because you can buy from another state, or in a more affordable suburb in your state, you will need a smaller amount of deposit.


Of course, with all types of investment there is also a risk to rentvesting. Way your options properly, so you can make an informed decision about whether this is the strategy that fits you.


Weighing the rent versus buy decision


Renting and buying a property each have their pros and cons. But the final decision ultimately depends on a number of factors, including your financial circumstances, your long-term goals and the outlook of your local real estate market.


Here are five questions to ask yourself if you’re mulling the buy or rent dilemma:

  • What type of home is within your reach and how much savings do you have?\
  • How many years do you plan to live in the property?
  • Which do you prefer: stability or the flexibility to relocate easily?
  • Do you want to shoulder the cost of repair and maintenance?
  • What do you want to achieve for your finances, career and personal life?


Make an informed decision by doing research. The internet offers plenty of rent vs buy calculators that you can use to calculate the cost involved in both approaches. You can also get a wealth of knowledge about purchase prices and rental rates in the neighbourhoods you’re considering. Lastly, it doesn’t hurt to seek expert advice from a reliable mortgage broker.


Your decision all boils down to carefully weighing all the benefits and drawbacks of both buying and renting, and factoring in your personal and financial circumstances.

Important Tips When Buying Your First Home

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You are investing hundreds of thousands of dollars when you purchase a house. When it is your first time, the task seemed especially daunting. It’s tempting to just purchase the first house you see that you like. As a first-time home buyer there are a lot of things for you to consider in order to minimise your investment risk. You need to know what the requirements are for first-home buyers and what to expect during the buying process.

Here are some things first home buyers need to know to prepare them mentally, emotionally and financially for the buying process:

Important factors to consider

These are the things you need to consider when purchasing your first home to ensure that you are making the right decisions.

Lifestyle – Ask yourself these questions to help you find the home that best fits you. How do you live day to day? What are your future plans? Are you going to upsize or downsize in a few years? Do you want your home  to be located close to amenities and services? How far from schools or shops are you willing to live?

Financial situation – Calculate the total amount of your repayments and related costs before taking the plunge. Save as much as you can for your deposit to reduce your monthly mortgage payments as much as possible. When calculating how much to borrow, estimate your current expenses, potential mortgage repayments and related costs such as water and council rates, and determine if your income can fully cover all these expenses.

Moderate your expectations – Getting into the property market is already an accomplishment, so don’t be frustrated or discouraged if the house you’ve been dreaming about is out of your reach. You would probably be one of those many people who purchase not just one house in their lifetime.

Do your research – Find out important facts about the property such as how much it was sold earlier, what changes had been made to it, what type of zoning it is covered by, etc. Check from the council whether there are major developments planned for the surrounding areas that could affect the value of your property. It also doesn’t hurt to be updated on the local news affecting the area where your property is located.

Grants available to Australian first-home buyers

There are several financial assistance products available when you purchase your first home.

First home buyers grant – Eligible first home buyers can avail of a grant when they buy or build their new home that will be used as their primary place of resident.

REBA $2,000 home buyers assistance – Eligible home buyers are entitled to a grant of up to $2,000 for the related costs of buying their first home, whether established or partially built, made through a certified real estate agent. The highest purchase price requirement for the Home Buyers Assistance Account (HBAA) is $400,000.

First home super savers (FHSS) scheme – With the closing of the First Home Save Accounts, the Federal Government launched FHS, which allows first home buyers to save for their deposit within their super fund.

Stamp duty concessions – Stamp duty is part of what you pay when buying residential property. Those who are eligible for the First Home Owner Grant can also claim a concessional rate of transfer duty if the dutiable value of the residential property and land is up to $530,000 or $400,000 for empty land.

Steps for Purchasing a Home

You have to know what to expect from the home buying process if you have decided to go ahead with it. Preparation is the key to avoiding hassles, stresses and delays that might derail the entire transaction. Here are the basic steps you can expect from the buying process:

Find a home – There are many ways for you to find what properties are for sale, including listings from real estate agents, online listings, and even driving to areas where you desire to live. Friends, family and corporate connections can also let you know if a property that may interest you goes up for sale.

Secure financing – But not before checking what type of home loans as well as first home buyer grants are available to you. Do your research and shop around because because your mortgage interest rate will heavily impact the final amount you will pay for your home.

Make an offer – Your offer will be presented to the seller’s agent by your real estate agent, who will also help you come up with the amount of the offer. Once your offer is accepted, the legal process of buying property has now started, including providing a good-faith deposit and the shift into escrow.   

Get a home inspection – Have an experienced professional inspect the property you are buying even if it appears perfect. Knowing the overall condition of the property helps you in the negotiation process and gives you a sense of security knowing you’d be making the right decision for your prospective investment.

Finalise transaction or move on – It’s time to close the deal if all went well with the seller, or if the inspection didn’t find any major problem in the property. If it is the opposite, then move on to another better-suited property for you.

Things are not quite over even after you have closed the deal and you have moved all your belongings to your new place.

It is important to learn the buying process beforehand to lessen the stress as you’re going through with it and to help you get that dream house at a price that you can afford.

Missing The Boat On Rental Applications? Preparation Is Everything

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Having a safe and secure place to live is an essential part of having a fulfilling life, so if you are constantly missing out on a rental property, you must review your application process to find out how you can improve your chances. If you have a history of being a reliable tenant, it could just be an adjustment to your application documents that is needed to get your next home.

Are Your Income Details Current?

Most of the application forms used by rental agents ask for similar information, even if the forms themselves are slightly different. Obvious identifiers are your personal details, current address, previous addresses and your income details. Make sure these income details are the current ones and not those of the previous financial year.

Fill Out All the Fields on the Application Form

A common mistake that we see all the time is a tenancy applicant not completing all the fields in the application form. Often these are names and contact numbers of referees, so we then need to contact the applicant to obtain that information. This delays the application and it could be the difference between making the shortlist and missing out altogether.

An agent asks for detailed information for one reason. It is our responsibility to make sure that the tenants we place in the properties we manage have the financial capacity to pay the rent on time. At Bunbury Real Estate, we also carefully check all our tenant references, so our owners can be assured that their properties are occupied by responsible people who will look after them.

Have Multiple Copies of Identification Documents on Hand

There are two other pieces of advice we can give you to prevent you from missing out on likely rental properties. The first is that you have multiple copies of your identification documents ready on hand to be attached to any application form. Time is of the essence, so instead of chasing around to get copies when you see a suitable property, you can fill out the application and lodge it immediately with the rental agent, complete with attachments.

Check Contact Details for your Referees

The second piece of advice is to have references from former rental agents and/or property owners ready on hand, rather than wait to find a property then need to chase them up. Again, this causes delays in your application. Also, make sure you check that the contact details you have for them are current, and let them know you are moving and that rental agents will be contacting them.

Remember that preparation is everything when looking for a rental property and being the best prepared of all the applicants could just be the edge you need to get your next home.

Moving To A New House? Be Prepared For Extra Costs

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Whether you are planning to move from your existing dwelling into your own home or another rental, your head is probably already filled with dozens of things you need to do. There are all kinds of details to remember before the moving van arrives and forgetting any of them could mean that your move becomes a logistical disaster.

Establish a House Moving Budget

Chief among them is the cost, and unless this is known beforehand, and money set aside to cover it, your first experience in your new home could be the shock of an unexpected bill. To those of us who don’t manage money well, budgeting is boring, but when moving house, it is just as essential as advising everyone of your change of address.

As a real estate agency specialising in both sales and rentals, we have seen quite a few clients financially overstretched because they didn’t cost everything in advance. At Bunbury Real Estate, we are expert at helping people find properties that suit their life styles but we can only advise that moving can be expensive, and suggest they stick to a budget.

Sell Things you Don’t Want

The most effective way to get the most out of your moving dollar is to be aware of the hidden costs of moving and plan some strategies to avoid them. For example, don’t take things with you that you don’t want. Donate them, sell them online or have a garage sale. You will get some extra cash in hand, and you won’t be paying for the extra space to transport them, only to throw them out when unpacking.

Don’t Waste Money

Don’t buy anything new now but wait until you have moved in and lived in the property for a while. A bargain piece of furniture now may be a waste of money if it doesn’t fit when you move into your new abode. Also, if you have subscriptions such as pay TV, cancel them now and put the savings towards your moving expenses.

Do Your Own Cleaning

Most rental agreements require that you get carpets professionally cleaned before you leave. However, doing all the other cleaning yourself, including mowing the lawn and tidying the garden, will save you hundreds of dollars. Use this to offset the cost of professional movers, who are experts at packing and protecting your important pieces.

Move Outside of Peak Hour

Another suggestion is to plan the move outside of peak hour. If your removalists or truck rental company charge by the hour, sitting idly in a traffic gridlock is a waste of money. Also, make sure all your possessions are insured while in transit, especially if you are moving yourself. Traffic accidents are a fact of life, so make sure you are covered.

Confused About What Is Important When Inspecting Property?

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If you are getting serious about buying property, you will be checking the internet for something in your price range, and considering the locations that best suit your needs. You may even have attended a few open homes and with many of them now staged to sell by professionals, you have come away confused about what is more important, the styling or the structure itself.

Don’t Be Fooled by Clever Styling

While styling will show a prospective buyer how to place their own furniture and accessories for maximum impact, it will not alert you to some of the more important and expensive issues you could overlook. A clever stylist knows how to draw the eye away from the least attractive parts of the property, so it is important to be aware of some of the potential pitfalls.

ID May Be Needed to Access an Open Home

Be prepared when attending an open home to provide identification. This is a security measure and many of our sellers ask us to do this. When we advertise open home inspections, we have a responsibility to the owners to take care of their property and possessions. At Bunbury Real Estate we take this seriously.

Be Practical – Look for Faults

If the property’s street appeal, overall size, number of rooms, amenities and car accommodation are what you are looking for, now is the time to be practical and look for obvious faults. Water leaks, for example, can be hard to spot, so check the cabinets in the wet areas for the smell of damp, or any signs of mould.

Unexpected Repairs Spoil the Enjoyment of the New Property

Bathroom and bedroom walls are another area where mould can build up, and often this just looks like a smudge on the paint work. Excessive mould should be cleaned professionally and the original cause investigated. It could be something that will need expensive repairs you were not expecting.

Check for sloping or bouncy floors that may mean stumps need replacing, and blisters or bubbles on paintwork that could indicate the presence of termites. Cracked walls may be evidence of subsidence. Building and pest inspections by experts will usually reveal the full extent of any rectification needed.

We sometimes have circumstances where a buyer is still keen on the property, and the seller is willing to adjust the price down to take account of repair costs.

Check the Location for Flood or Fire Risk

Be aware that even though the property and the location may look perfect now, it could be in a major flood area or even be a bushfire risk in the right climatic conditions. Buying property is a major financial commitment, so it is worth taking the time to check everything before deciding.

How to Get the Best Value From Your First Rental Property

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Are you thinking seriously about buying your first investment property, or have you just purchased one and you are in that first flush of excitement? Residential property is still one of the most popular methods of building wealth in Australia. However, there are a few things you should be aware of to avoid making the most common landlord mistakes.

An Investment Property is not a Hobby

At first, many investors think of their property as a hobby or a side-bet against possible future insecurity. From day one, you must look at this property as a business. Take it seriously and access the right resources to support the large sum of money you have committed if you want the property to achieve its full potential.

Keep it Maintained

The next mistake, and a frequent one, is to skimp on repairs and maintenance. New landlords often try to build early cash flow by not replacing things like worn floor or window coverings, leaking taps or shabby bathrooms. Good tenants will pay a higher rental for a comfortable living environment, and maintenance increases the value of the asset.

Personal Relationships with Tenants

This can be a tricky one, especially if you intend letting to a relative or friend. If your relationship is a close one, your tenant may take advantage of it by falling into arrears with their rent, or objecting to a legitimate rent increase. Remember the earlier advice that an investment property is just like a business and you need to treat it as such.

Delegate Property Management to Professionals

There is a way to keep the tenants you know personally at arm’s length and that is to engage a property management agency. Looking after an investment property requires knowledge of tenancy laws and the ability to select quality tenants. Do-it-yourself landlords have high vacancy rates because they don’t have the professional systems in place to manage their properties effectively.
This is something we see first-hand all the time. Bunbury Real Estate employs experienced property managers who understand the tenancy legislation and know the local rental market. We have systems in place to reference check prospective tenants, advertise our rental properties to the widest possible market and do regular inspections. Our management fees are also tax deductible.

If You Don’t Have an Accountant, Get One!

Now that we have mentioned tax, you will get the best value out of your investment if you get a good accountant, preferably one who knows property. Accountants know the legitimate tax deductions applicable to investment properties, as well as the intricacies of negative gearing and depreciation.
Follow these few guidelines and you will enjoy owning an investment property so much that you will soon be buying another one.

Housing Market Recovery Attracts Buyers

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As we are now halfway through 2017, the real estate picture in Western Australia is becoming much clearer. The experts are touting this as a transition year for the state, with most of the past reductions in housing prices now behind us. From an overall point of view, investors priced out of the market in the eastern states are looking here for opportunities. At the same time, local buyers are returning as confidence in the general economy also returns.

Low Prices Will Not Be Around Forever

If you have been sitting back looking at the market and wondering if you should step in or stay out, those who know the market well are advising to buy now, as prices will not stay at these levels for much longer. Whether you are a looking for a home to live in or for an investment property, the advice is to look for areas close to schools, transport, shopping and employment to get the best value for money.

Take Advantage of Incentives – They Won’t Be Around Forever

Prices are still low so housing is more affordable and interest rates remain at record lows. The First Home Owners Grant has been increased until the end of the year, and the income threshold for low deposit home loans has also increased, making it easier for first time buyers to enter the market.

Our Advice for First Home Buyers

This is all good news from our point of view as real estate agents. Here at Bunbury Real Estate we have done our best to assist our clients during the difficult times, and we are looking forward to doing the same in what we hope is a long-running, rising market. However, we do have some words of advice for new players, especially those looking for their first home to occupy.

While you are right to study the market in order to understand how it works, it is not the only thing you should be considering. If you were priced out of buying your dream home, but now it is within reach, there will be a certain amount of emotion involved in this search.

Be Clear About Why You Are Buying

Buying a home and buying an investment property are two different types of decisions. The investment property is a considered, calculated move to build wealth, while buying a home is putting down roots, establishing yourself in stable employment and perhaps preparing to start a family. It has a permanence about it that will most likely influence the type of property you are looking for.

Most people in the real estate industry believe that this is the right time to buy. With this opinion supported by market data, you should be asking, not about the market, but why are you buying? Once this is clear to you, we can help you find the right property for your needs.