When you buy a property, the chances are that the future value of the property isn’t that high on your list of priorities. After all, we buy a home to live in, not to brag about how much it appreciates over time. But even though this is the case, it’s still worth taking a look at various factors before buying, so that you can safeguard your investment – ensuring that if you want to remortgage further down the line, you will be in a good position to do so.
Any house purchase is a form of property speculation, even if you’re not buying a place for commercial reasons, e.g. to rent out. So why not behave like a property speculator before you consider your buying options?
This is a very interesting exercise, and if you can get a feel for it, you may even luck out and get hold of a real bargain. Sadly, it’s more of an art than a science, and of course life doesn’t come with guarantees – but a bit of knowledge is never going to hurt.
First things first. Look at your price range. It may be that for the first few years, your mortgage will feel like a bit of a burden. But bear in mind that the money is going right into your investment and not into someone else’s pocket. Hopefully over time the mortgage will ease – as your earnings (hopefully) rise, and the debt decreases in real terms through your regular payments and in relative terms due to the magic of inflation. Getting an illustration of what you’ll pay is easy enough – just use a mortgage calculator (example here) and take it from there. Be mindful of what you can afford though and don’t overburden yourself. It’s great to own a house, but you also need to be able to enjoy life too.
The next step. Research the area you intend to buy in. A lot of people – quite rightly – choose an area due to the quality of the local schools. If this doesn’t apply to you, there may be a wider choice of places to go for.One thing to remember is that yesterday’s unfashionable areas are often tomorrow’s property hot spots. Take the Hackney area of London – anyone buying in Hackney in the 1990s would perhaps have felt a little surprised if you told them that, two decades later, it would be one of the coolest places to be. Same for Williamsburg in Brooklyn, New York City.
If you can find historical data on local property prices, it’s always worth having a scan through it. Some areas appreciate around the same rate as inflation, while others see an almost exponential curve. Get out and actually go visit new places too, because sometimes the signals of an area on the up can be almost indefinable – the kind of people you see around, the general state of repair in the neighborhood, the number of interesting local businesses around.
When you’ve picked an area, home in on properties that seem undervalued. It’s well-known for instance that when a property is uninvitingly presented, its value can be significantly reduced. If the things that need fixed are really just cosmetic, you can save thousands. Of course, when it comes time to sell, you can maximise your property’s value by carrying out some home improvements
Buying a property doesn’t have to be massive effort – but if you bear in mind that areas change over time, often becoming massively sought after – then you can be ahead of the curve and find a home that will offer more than just a place to return after a day at the office.