How to view a property correctly!

Check your Property

When you view a property, there are certain facts you need to establish from the inspection. These facts will help you understand the layout of the property and the amount of work required to refurbish to the market’s requirements.

To establish all the necessary information from a viewing, you will need to spend some time at the property. Do not allow the agent to pressure you into completing a quick inspection because they have another viewing elsewhere. If this is the case then re-book the viewing to allow for more time.

The viewing should be done in two stages.

Firstly, you should wonder around the property to establish the layout and consider any layout changes to make the property more habitable. You should imagine yourself in the shoes of your prospective buyer or tenant and what they may pick up as potential problems with the existing layout.

Secondly, start from the main door again and review the whole property so that you can check every possible detail. I would always advise to have a camera phone for taking pictures along with a PDA, notebook or a small recorder for making notes. This is important as you progress to viewing several properties over a short period of time, the details may become blurred and its always handy to refer back to your notes.

You need to make notes for costing purposes. They will become useful to refer back to when estimating the cost of the refurbishment and requesting various tradesmen to establish the extent of the work needed.

Ensure that you make notes on the following areas of the property.

Front and back gardens
What is the state of the garden walls?
Do they need repair work?
Is there any rubbish in the garden?
Does the garden need landscaping?

Outside of the house
Are there any visible cracks or damaged areas to brickwork or rendering?
Are there any cracks around doors and windows?
Are there any cracks close to the ground?
What is the state of the mortar?
Are there any signs of damp?
Do the walls seem straight?
What is the condition of the guttering?

Inside walls
Are there any visible cracks or damaged areas of plasterwork?
Are there any cracks around doors and windows?
Are there any cracks close to the ground?
What is the general state of the walls?
Are there any signs of damp?
Do the walls seem straight?

Windows and doors
What are the windows made from?
What are the doors made from?
Is there a FENSA certificate?
What is the condition of the frames and window panes?

Roof
What is the condition of the roof?
Are there any stains in the internal ceilings showing evidence of leaks?
What is the condition of the ceilings?
Can you get access to the loft space to check for daylight through the roof?
What is the condition of the felt?
What is the condition of the chimney?
Does the flashing need repair?

Floors
What are the floors made of?
Do the floor boards creak?
Are the joists showing signs of movement?
Is there any evidence of dry rot in the wood work?

Damp Proof Course
Is there a valid Damp Proof Course guarantee?
Is it worth conducting a Damp and Timber survey (usually free)?
Are there signs of damp?
Check around ceilings, water pipes, windows, doors and floors.
Are there any air bricks or vents installed?

Electrics
How old are the electrics?
Is there a valid NICEIC certificate?
What is the state of the electric wires, light fittings and sockets?
Does the circuit board need replacing?

Gas
What is the condition of the gas pipes?
Is there a valid Corgi Gas Certificate?

Bathroom
What is the condition of the bathroom suite?
What is the condition of the plumbing?
Are there any water leaks?

Kitchen
What is the condition of the kitchen?
Are the kitchen units in need of repair or replacement?

Heating
What is the condition of the central heating system?
How old is the boiler?
Is it a combi-boiler?

Drainage
What is the condition of the sewage drains?

External buildings

Using the answers to the previous questions, assess the condition of any external buildingsincluding garage, sheds and greenhouses etc.

Driveways
What is the condition of paths and driveways?
Do the walkways need attention or weeding?

General
Does the house need modernising?
Does the house need wallpapering or painting?
Does the house need new floor coverings such as carpet or laminate?
Does the layout of the house need to altering to make it suit the market place?
Do the internal walls need knocking down or new partitions need building?

The questions give a general idea of what a professional surveyor may look for in a property to obtain a valuation. The answers will also help in compiling a quote for the amount of work needed to get the house back on the market.

Renter Beware

Finding a decent apartment while you are settling down in your new environment can be a real headache, so here is a list that might help you with that process.

• You really need to take the time to understand the lease if there is one; don't let them rush you into signing so fast, ask if you can review it first, take it home, and if need be take it to a lawyer. However, it is important that you sign and initial in front of the leasing agent once you decide on an apartment.
• On the subject of leasing agents, if you encounter an unpleasant one, make note of a red flag because they represent the company and that's not acceptable behavior in any business setting. You should be treated with respect at all times and they need to listen to any questions or concerns you may have.
• Always inquire about a walk through. RED FLAG: When they tell you they do the walk through. That's when you walk away before you sign. What their standards are and yours may be on the opposite ends of the earth.
• If you do decide to let them do the walk through and you are not happy, contact the property manager immediately and try to rectify the problem or problems, try not to get too emotional but do stay strong on your concerns.
• A lot of apartments are becoming more lenient on allowing animals and so therefore you will encounter animal smells in the common hallways. This is disturbing, and a simple solution would be to have animal free buildings for those tenants who prefer not to encounter the mess. The same should go for smokers. This is another red flag.
• Do your homework on apartment complexes; visit their website, Google feedback right into the search engine. You will always find negative feedback and as well some positive. Only you can weigh what is really important when you read this information.
• If you do sign the lease and decide at the last minute you made a mistake, you will end up paying for that decision. In most cases, it's a 2-month break lease agreement in addition to the first months rent you already paid, so food for thought. More than likely you will get your security deposit back, but make sure what they tell you is in writing. If for some reason you cannot get your security deposit back, or only a portion of it, contact the property manager first, then the regional manager and demand a thorough explanation why and if you have been more than fair with them, they need to be fair with you.
• Stay on top of the progress and escalate if you have to the Regional Manager. Again, stay firm, but unemotional in all cases, sometimes it cannot be helped and if you get the right person, you should be satisfied with the end result.

This should serve as a guide to you when you are seeking to relocate to another city or state or just happen to be a first time apartment dweller. Good luck.

Money makes moving easier, among so many other things so if check out how to get a loan

 

Should You Sell or Hold Your Property Development?

Hold Property

For many property investors, the appeal of property development is the promise of creating enormous capital gain in a short space of time. Most people assume that to make money out of property development you need to sell the properties you develop. Is this a common misconception?

The decision of whether you should sell or hold the properties you develop depends on a number of things, including your financial position, the market conditions and the type of development you are undertaking. But primarily it comes down to your objective in doing the development in the first place. Some property developers aim to increase rental returns, while others seek to make a cash profit or simply to increase and unleash their equity. Developing property can also be a way of obtaining new property at wholesale prices. It's important that you are clear on your objective prior to starting a development as it can influence many aspects of the development.

People often sell properties they have developed because they think they have to sell to make money or "realise the profit". However, by refinancing you can still access the equity you have created. Why might this be a better option than selling? It comes down to the risks and costs associated with developing to sell. Developing to sell requires expert market timing to get the property cycle right. Plus, if you sell properties that you have developed you will likely have to pay Sales Agents Fees and Marketing (3-4%), GST on the Profit Margin (2% if a 20% margin), and Income Tax (as much as 9% if a 20% profit margin).

It's clear that if you develop and sell, transaction costs will eat away at your profit. For that reason, I believe developing to sell should not be the first choice in every instance. You could be far better off by hundreds of thousands of dollars by holding the properties. Many of the most successful property developers, such as Frank Lowy (developer worth $6 billion who has built a worldwide shopping centre empire) rarely sell.

So when should you develop and hold? The simple answer is when it is feasible. Depending on the type of development you do, you will generate either additional rental income over and above the interest costs OR you will generate additional equity. But preferably you will do both.

So when is the best time to develop and sell? Being a successful property trader requires focus, commitment and a lot of time. You need to do much more market analysis and it is inherently more risky as you are timing the market. To justify continual buying and selling, you need to generate high returns to warrant the transaction costs (agent fees, stamp duty, income taxes). You also have to be prepared to "landbank", which is common amongst developer, who may hold land for 10 or more years.

Depending on the project there may be an opportunity to develop and hold some of the project (e.g. 3 units of 6) and sell the rest to pay down some debt. Professional developers can make a lot of money developing and selling, but it is a full time profession. Most developers still hold some part of their portfolios for long term investment.