To buy the best property for your needs, you need a plan

The auctions are back on again, and the chatter about what is happening on the 2012 property market has started. By Labour Day the trickle of opinion on the state of the market will turn into a flood.

The big question for many of you right now may well be: Should we buy the family home in Brighton or Hawthorn now – or should we wait till later in the year? You may be worrying about what’s happening to the economy and wondering how it’s going to affect the property market.

But the fact is it’s still impossible to say what’s happening on those two fronts. And whether you decide to buy now or later in the year, first you need to work through your home-buying plan for 2012. To some people this is an amazingly difficult ask. But I can assure you that if you make a sensible plan and follow it, it’s a Black Caviar certainty you’ll buy a house that suits your needs, makes your family happier and lets you retire earlier.

Your plan should include both financial and emotional outcomes. Financial outcomes include whether you aim to minimise debt as soon as possible and whether you want your home to help you build wealth. Emotional outcomes are about what kind of property will maximise your family’s happiness and wellbeing.

Your plan will of course be very different depending on what stage of life you are at, whether you’re a single, couple, have young children or older children, are in mid-life or retirement.

So grab your iPad or a piece of paper and pencil and divide a page into three columns. At the top of column 1 write ‘Position’; at the top of column 2 write ‘Property’ and at the top of column 3 write ‘Price’.

This is where you answers will go –what about the questions?

Start with the emotional outcomes. If you are a single or child-free couple you might be focusing on car spaces, benchtops or a groovy locale. But think in terms of a bigger picture. Imagine your life five years from now. Maybe you’ll meet somebody, leave somebody, get a job, lose a job, go to Nepal, discover the punt. The point is your price column shouldn’t tie you down to a life of endless mortgage payments; your property column should have room for a spouse or child or renter; and your position should go beyond the one funky suburb. Your best emotional outcomes are flexible ones.

If you have young children, your focus will be on how the house can accommodate you all happily as the family grows. So think hard when filling in the ‘Property’ column on how the floorplan can combine supervision with some separation. With older children your emotional focus is schooling and transport. So when you fill out the ‘Position’ column, remember that where you live in relation to schools and public transport determines how much time you’ll spend driving the kids around in the car.

In the mid-life stage, there’s a chance you’ll make a big dramatic life change – move to the country or overseas. But when you look at ‘Price’ be careful you don’t rule out the possibility you may want to come back to a home in the city. In the retirement stage your emotional focus will move back to the ‘Position’ column – to somewhere you can easily walk to a cafe, catch a train and see your doctor.

In terms of the financial outcomes in your life your answers will revolve around growth (building wealth to give you choice later in life), cashflow (allowing you to live for the now) and risk (allowing you to sleep at night). All boring but necessary.

Once you have a PPP plan, looking at each home becomes much easier and quicker because you know what you want. You can assess each home against your plan rather than looking at each home and then trying to work out a plan to fit.

If your PPP plan is functioning, well then the question asked at the start, “Do I buy now or do I wait?” can be answered relatively easily. It’s not so much about getting the timing right, but about the property itself: does it meet my PPP plan and does it feel right? Yes? Well then, buy it! No? Wait and keep looking.

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.