Sunday, February 28, 2010

Anatomy of a good home buy

I am no expert when it comes to investing in property, but as I have invested in numerous properties over the last decade, I have gained some valuable experience.

I made money from some and lost money from others. Some say you need luck to make money in real estate, but I believe there are some fundamentals that one can use as a guide to make as infallible a decision as possible.

1 Good location

In property selection, particularly for investment purposes, the key is location. For owner-occupied properties, location may be less significant as individuals have different preferences. Some like

quieter locations away from commercial activities while others choose to be close to specific amenities.

Proximity and accessibility to schools, transport lines, shopping centres, factories and specific suburbs are some important factors to consider.

Even for an owner-occupied property, it is important to consider how other people would view the location should you decide to sell it one day. In short, try to be as objective as possible when it comes to location.

2 Good site

Is the property in a good site? Is it next to an MRT station, bus stop, monsoon drain or power cables? Or is it at a T-junction? There is nothing technically wrong with T-junctions, but some people believe it obstructs the flow of good luck in one’s life.

Is the site prone to flash floods and so on? Many people like to live near MRT stations, but some foreigners prefer to avoid the constant noise of the trains. They may prefer quieter areas.

When choosing the site of the property, consider the points that will appeal to your potential buyers in the future.

3 Good layout

Do you like the layout of the apartment or house? Many people prefer their living rooms to feel spacious. Are there many angles and nooks in the house? Some people may consider them bad fengshui.

A more practical consideration is whether the living room and bedrooms are irregularly shaped, with lots of unusable space. A good, clean layout will save you the time, effort and money that you otherwise would have to spend on redesigning around oddly shaped and oddly positioned living areas.

4 Good address

Securing a good address without paying a premium for it is like a windfall. It may not matter much to you now but a good address, such as a nice sounding road name or an auspicious sounding unit number like #08-08, may attract more interest and demand in the property and also a higher price when it is time to sell.

5 Good history

Many potential buyers like to know the background of the property they are buying. Who are the current owners? Why are they selling? Who built the property and how old is it? Is the property owner-occupied or rented out? These things matter in the making of personal and economic decisions.

If the property is for investment, then the purchaser should look into two other areas:

6 Good rental yield

What is the expected rental yield for the property? Is this an acceptable level for you? What is the median rent for properties in that area?

7 Good potential for capital appreciation

What is the median price for property prices in that area? What is the highest and lowest price for properties in that area over the last three, five and 10 years?

The writer is managing director of mortgage consultant Global Creatif Financial. The views expressed are her own.

Lucky numbers

Securing a good address without paying a premium for it is like a windfall…A good address, such as an auspicious unit number, may attract more interest and a higher price when it is time to sell.

Source: Sunday Times, 28 Feb 2010

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