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Apart from the important aspect of location, these are my top 10 things relating to the physical aspects when buying a house, new or otherwise:

1. Termites / pests – always obtain a pest inspection report from a licensed builder and pest inspector to ensure the house is free from termites and other pests which may fester behind walls, wardrobes, floor and roof. These pests cannot be visually detected during routine inspections.
2. Rising damp – a building report will also reveal possible rising damp which may damage walls, floorboards and the long term structural integrity of the building.
3. Roof and building structure – Certain houses in Australia which are built before the 1980s may contain asbestos materials which can be harmful to human health. Some houses from earlier periods are also built on concrete stumps underground without adjustment joints and should there be extreme changes in temperature due to climate conditions, may cause cracking to brick or concrete walls.
4. Concrete cancer – this is a serious problem which is caused by rusted reinforcing from within the steel. Rusting causes the steel within the concrete to expand and allows water to seep into cracks and joints. Over time, this causes concrete spalling and will affect the structural integrity of the building.
5. Land subsidence – this is caused by a number of factors which include, poor water drainage, the type of soil and by water movements underground.
6. Aircraft, train or traffic noise – houses which are on flight paths, close to train tracks and main roads will experience noise and will affect its saleability.
7. Neighbouring developments – always check neighbouring houses to ascertain the type of residential dwellings such as proposed apartment blocks commercial development which may positively or negatively affect future values.
8. Zoning of land use – check and understand the type of land use which the house is built upon. Some residential zonings may also include industrial use and this may positively or negatively affect future values.
9. Streetscape – walk around the streets within the neighbourhood at different times of the day, talk to locals and find out how they feel about living on the particular street, whether there are any adverse aspects of living in within the local surrounds.
10. Feng shui – this is a more personal issue and depends upon individual tastes, beliefs and values. To me, the basic principles of feng shui attempts to apply common sense to living in harmony with our environment.  If applying such principles does not cause unnecessary costs or inconvenience, I am a firm believer of adopting good feng shui to achieve harmony and balance between yin and yang.

Popularity: 16% [?]

One of the most important aspects of property investment is to ensure the final product is in accordance to what was agreed upon at the point of exchange of contracts. This applies to all types of residential property – houses, semi-D’s, townhouses and apartments and is especially so for units bought off-the-plan.

The pre-settlement inspection is a process to allow the buyer to inspect and identify any defects, flaws in workmanship and variations to contract specifications. These issues are the responsibility of the vendor / developer to rectify to the satisfaction of the purchaser within the terms and specifications of the contract of sale. Although purchasers are generally protected against building defects by a 7-year home builders’ warranty, it pays to identify defects at the onset so that all rectification works can be carried out prior to or immediately after final settlement.

Current building and pest reports are also useful for buyers to ascertain issues such as termite infestation, rising damp and structural integrity of building and construction.

A copy of Strata Living – What you need to know about living in your strata community can be obtained from the NSW Office of Fair Trading, Department of Commerce. It is a comprehensive guide to assist residents to deal with issues arising from apartment living.

Here is a general checklist of items which should be inspected and tested to be in good state of repair and working condition to assist home buyers conducting a pre-settlement inspection. This checklist of items should be used as a guide or reference only and to prompt the buyer for other items which may have been omitted. I make no warranty this checklist is neither exhaustive nor complete as it is based solely upon my experience and research. Buyers should make additional notes against these items and conduct further detail inspection if required.

A. Electrical and systems

• Main electrical switch board location
• Water mains
• Lighting
• Air-conditioning
• Gas ducting
• Heating
• Powerpoints
• Telephone / TV / antenna ducts
• Intercom, security video systems
• Ducted audio / hi-fi system

B. Utilities, appliances, fixtures

• Current utility company for a. Electricity b. Gas c. Telephone d. Water
• Storage, closets, wardrobes, linen cupboards, cellar, attic, basement store, garden shed, pool shed
• Security keys, locks
• Toilets
• Bathtub, shower heads, basins, tapware
• Kitchen equipment – fridge, freezers, dishwasher, microwave, oven, stove-top, rangehood, insinkerator, filtered and hotwater system
• Laundry – washing machine, dryer, laundry sink, retractable clothes lines
• Fireplace – gas heaters and maintenance
• Collection days for: a. Garbage b. Bottles c. waste and used papers d. bulky items
• Gardening, lawn mowing and landscaping

C. Structural and internal fittings

• Roof tiles, roof gutters, down spouts, splash blocks
• Wall paint – scratches, cracks, nicks
• Wall tiles, floor tiles
• Windows and door seals
• Glass doors and windows
• Ceiling and floor skirting
• Carpet installation and seams
• Floor surfaces
• Ceiling height
• Wooden floors, outdoor wooden decks
• Wood joinery
• Bench / countertops

D. List of current / useful contractors / tradesman and contact numbers and warranties

• Remote control gates
• Pool repair and maintenance
• Airconditioning / heating
• Spa / sauna maintenance
• Kitchen equipment and appliances warranties
• Private elevator maintenance
• Gym equipment
• Automatic / electrical blinds, shutters, overhead roofing maintenance

Popularity: 100% [?]

The following is a general 3-step approach to buying the right property although these steps may be a little different depending on the objectives of an investor and an owner-occupier:

1. Right cycle. The property market moves in cycles and different states have different cycles. One needs to identify the market is close to bottoming out in a particular state / region to get into the market.

2. Right suburb. Identify suburbs with a good track record for capital growth. Suburbs with good amenties such as public transport, schools, business parks and local attractions / lifestyle options but have yet to see any significant rise in prices compared to its neighbouring areas. Suburbs with good upside potential will prove to be good long term investments when gentrification happens. Always choose a strategic location within the suburb such as proximity to ferry wharf, train station, local shops or easy access to main arterial road. These areas within the suburb will always fair bettter than others which are further away from these conveniences.

3. Right property and price. The old adage “worst property in the best street” may only hold true depending on your investment objectives. You may require a bigger budget to renovate and attract tenants if you are an investor.  Once you have found the right property in the right location, the last criteria would be to ensure you pay the right price. Research on the price of similar properties transacted in the past, check out the median price for apartments or house in the suburb (and know the limitations and flaws about median prices). Talking to neighbours or the person mowing the lawn in your chosen suburb is always a good way to find out more useful information.

Popularity: 26% [?]

3 bedroom house by the Maribyrnong river valley in Mebourne

With rising interest rates, it is obvious that positive cash flow properties will become more scarce. Buying into a positively geared properties has the key advantage, apart from having a positive cash flow, is its ability to shield the investor from the ups and downs of the property market. When the economy or the property market is soft, a cash flow positive investment property does not add additional burden to the investor because it is more than paying for itself.

A combination of the following factors can achieve a positively geared outcome for the investor:

• Low interest rates. It is obviously easier to find positively geared properties in a situation where interest rates are low. However, it doesn’t necessarily mean that these type of properties will disappear altogether.  The astute investor will need to make certain assumptions about where interest rates are trending in order to make informed decisions on whether to fix their interest rate on a mortgage in order to minimise the upward exposure on mortgage costs. Read accurately, a good interest rate strategy can turn properties with negative cash flow to positive cash flow even in rising interest rate regimes because the astute investor has fixed his/her mortgage cost base.

• Potential growth suburbs within capital cities. Every major city has suburbs which have gone through a process of transformation and gentrification. Picking these suburbs involve looking at neighbouring areas which have experienced good capital appreciation whilst property prices in the surrounding (growth) areas have yet to move with the market. As long as these surrounding areas have good public amenities with good access and are located strategically close to the CBD, they are more likely to experience similar growth in the future like their neighbouring areas did in the past.

• No land tax. A modest property which is within the threshold for land tax could potentially save the investor thousands of dollars each year.

• No strata levies. Some investors are more partial to buying landed property over apartment units for this reason. Imagine the amount of savings that can be made over the course of holding an investment property which is free from strata levies.

Among some selected areas identified by experts to  experience good capital growth over the next five years and hence increase the chances of properties being positively geared and give investors an opportunity to refinance are:

• Chippendale and Darlington in Sydney, New South Wales
• Maidstone and Braybrook in Melbourne, Victoria
• Thebarton in Adelaide, South Australia
• Clontarf in Brisbane, Queensland
• Victoria Park in Perth, Western Australia
• Glebe in Hobart, Tasmania

Popularity: 25% [?]

Mirvac’s proposed new apartments on Mary street in Rhodes will eventually block out the existing water views of the west facing apartments in its older Adina block. The Adina block comprise of 95 units of mainly 2 and 3 bedroom apartments and was completed in 2008.

The proposed new development is located directly between the front of the Adina building and the water foreshore of Homebush Bay. Potential investors and purchasers of the Adina apartments facing west to with the water views of Homebush Bay should remember to factor this issue into their buying process and asking price.

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Popularity: 37% [?]

If you are buying into an older block of apartments, you are entitled to review the minutes of the Body Corporate meetings and AGMs upon obtaining the authority of the vendor. By doing so, you are looking to satisfy yourself there are no hidden problems or issue which you may otherwise be unaware. Among the things to look for in the minutes include:

• Frequency of meetings and issues discussed. Depending on the Executive committee, which are appointed by the owners’ corporation to manage the running of the building, meetings should be held as least 2 – 4 times a year, apart from the AGM. Typical issues discussed should include the state of repair of the building, the administration costs, sinking fund and its adequacy, complaints and problems which may arise and how these problems are being resolved.
• For newer buildings, one should look to ascertain how defects are being resolved. The developer is required to fix and repair defects on the building which arise within the first 7 years.
• The sinking fund is an important element of maintenance of the building to ensure any works required in the future are adequately provided for.

Other handy tips may include talking to occupants of the building to find out if there are any issue or problems associated with the building such as nagging and recurring repairs and the effectiveness of the Body Corporate in resolving these issues. Be aware of whether you are speaking to an owner or a tenant as both will have different perspectives in their views.

Popularity: 13% [?]

I accidentally stumbled upon this one recently which saved me over $21,000.

I was interested in a brand new apartment in Sydney which cost $610,000. Due to the NSW’s government’s stimulus plan, all home buyers get 50% off the stamp duty on newly built homes up to only $600,000. After a long drawn negotiation process with the developer, I eventually managed to convince them to reduce the price to $600,000 so that I am eligible for the 50% savings which is an addition $11,250.

I’m not suggesting you go look for property just above $600k. Obviously you need to ensure it’s a good investment and the price point is reflective of market ie $ per sqm to ensure original pricing by developer is not inflated.

Popularity: 35% [?]