Due diligence upfront will save expense in the long-term

GUEST OBSERVATION

A property purchase is going to be the biggest investment of your life. You might as well get it right.

For the newbie to the property market, it pays off in the long-term to do your research. Yes, you need to fall in love at first sight with your property, but you also need to be smart with your investment, as it will be the building block of your future wealth creation. 

The novice purchaser has to arm themselves with a set of questions and not just react emotionally to the property.

First, do your homework on the developer. Does the developer have a track record of delivering quality product and on time? No one wants long delays and what happens to the interest accrued on your deposit if there is? Do you get to keep the interest your deposit earns over the construction period? 

A walk around the neighbourhood will yield a surprising amount of information to you. You will be able to discover linkages to schools, universities, public transport systems and hidden cafes, gymnasiums and food stores. Amenities such as these will not only greatly enhance your quality of life but also your property's future value.

Importantly, different projects will measure the area of their apartments in different ways. It is worthwhile to ask whether the area stated on the plan includes external areas such as balconies and winter gardens. The area you will be purchasing should not include external areas. The dollar per square metre metric is a handy one for comparing projects but should not be used in isolation.

If you are looking at the property as an investment, what is the projected rental yield for the property? Seek an opinion on rental value from an agent who specialises in the leasing of apartments in the area you are considering.

Also ask some specific building-related questions. Due diligence upfront will save expense in the long-term. Carefully examine the quality of the finishes, appliances and other fixtures. These will vary significantly from project to project and the differences may not be reflected in the price thus eroding value. 

Also housekeeping. Do the exhaust fans vent externally? A must especially in summer time when cooking odours carry more. 

And often a matter of contention, how is the rubbish/recycling dealt with? Are there chutes accessible on every floor? Are their dual chutes? 

But perhaps the most important consideration is, has the development been approved? Many developments go to market first, to make the sales, then lodge their planning application. This means that the design, configuration and other aspects of the building may vary from what you purchased. The planning approval process is unpredictable and can be lengthy. VCAT hearings and objections may delay the start of construction and, in some cases, the development may not be approved.

Stephen Speer is head of marketing and business development at Hengyi Australia, (currently launching the Light House).