Many people dream of owning a home. What many struggle with is the process of buying one. These are some lessons from my experience:
First, location is key. What is the proximity to social amenities? How is the security of the area? What is the distance to your place of work or business? How is the traffic? These factors affect your daily routine.
If it’s an apartment, which floor is the house on? Are there stairs or a lift? How spacious are the rooms? Is there sufficient parking space? Is it a gated community or a standalone house? Is the property in an area prone to flooding? How is the water supply and sewerage system? What is the quality of the materials used in construction?
Then you also have to consider the return on investment. Calculate expenses and profits beforehand. If you are repaying a loan or mortgage; is the income from the house or the opportunity cost if you are living in the home more than the expenses of repaying the mortgage or loan?
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If the expenses are higher, you can opt for a cheaper mortgage or loan. If the house is appreciating fast, you can sell it after a few years at a profit.
If you are planning on renting it out, what’s the demand like? How is the population of the area and the availability of houses in the area and prices they are being rented out for?
Budget for 25 per cent more than the value you are buying the house. A lot of additional expenses are involved when purchasing a property.
They include things like stamp duty, legal fees, land rent and rates, valuation costs, mortgage processing fees, insurance fees, cost of incorporation of the management company, and advance service charge, among others.
Sometimes the property might not have all the fixtures and fittings or you might want to customise them.
Do your research
Work with a professional to conduct a title search. This will help you find out the legal owner, whether the land is in a restricted area, if the title has been charged (attached to another loan), if it has a caveat or if there are any outstanding land rates.
Is the property already built or is a proposed development? If you are taking a mortgage, some financiers only finance up to a certain percentage if the development is off-plan.
Are there any legal implications to the constructing company if the project is not completed on time? You do not want to pay for a house and it takes 10 years to complete or, worse, stalls.
If you wish to sell the property quickly how fast can you get a buyer? Also find out what documentation will be transferred to you upon purchase and how long it will take.
-The writer is a Marketing and Communications professional at ABC Bank.