The excitement of buying a property

If you've never bought a property then you'll never know how exciting the process is. The rush of exhilaration when the paperwork reaches settlement and the keys are handed over to you.

A friend of mine is going through the process of buying a property. I haven't mentioned to her that I'll be blogging about it and she'll be too busy to read everything that I write so this post will slide right under the radar. Here are a few of her concerns and the concerns that I first experienced:

* Am I paying too much for the property? Is it the right price? How much should the property be worth? Am I overpaying?
* Am I buying in the right location?
* Am I buying at the wrong time of the property cycle? Will property prices take a dive after I've bought?
* What if I lose my income/job/revenue/income stream/get made redundant/get fired etc then how can I pay the mortgage?
* What if the place gets burnt/damaged/destroyed/untenanted?

Those are a few of the biggest concerns for many of us. There's always going to be risks involved. Life isn't risk free and we have to make choices in order to progress in life. The only thing we can do when those worries and concerns are troubling us is to ensure that you do your due diligence and research before buying one.

Are you paying too much for the property? You can check RP Data or Residex or http://www.onthehouse.com.au/ for the last sale price on the property, the recent sale prices at that address if it's an apartment block and the recent sale prices along the street and in the suburb. All of that costs around $50-$100 and it could save you making a mistake by overpaying by thousands of dollars! If you're really in doubt, you can pay a professional valuation firm to value the property for you before you make your offer - sure that'll cost you around $500 but do whatever you need to do to allay your fears and perform your research.

Are you buying in the right location? What are your needs and goals? If it's for you to live in then does the property location meet your needs in terms of work and family? If it's an investment property then which category and type of tenants do you wish to attract and do those class of tenants rent in the area you wish to buy in? Eg: If you wish to rent to young professionals then does the location offer cafes/eateries/amenities/lifestyles that the young professionals are attracted to? If you wish to rent out to families then is the property close to schools, transport, sport fields etc?

What if you buy at the wrong time during the property cycle? Who can predict the future? All of us can only predict the near future based on the current state of our economy. If you're buying during a boom then you'll notice that there's an enormous crowd going to open houses and you're being outbid everytime you make an offer. The market is hot and there's probably less chance of discounting the price. If you're buying during a repressed period then you might be the only one to turn up to the open house, the property may have been listed on the market for several months - demand is low so go hard and bargain hard. None of us know what the far future holds and you can only base your behaviour on the near future and historical price behaviours.

What if you lose your job/income/become redundant or the place gets burnt/destroyed/untenanted blah blah blah? You can pay for insurance to mitigate those risks and/or you can have emergency funds to cover those periods of zero income. Income protection insurance, trauma insurance, death or TPD insurance, property insurance, landlord insurance, home and contents insurance and the list goes on and on. Whatever it is that worries you - there's insurance that covers those worries.

If you need a place to live in or you're sick of being shuffled from rented property to another or you're simply looking for an investment property to invest in - there are always going to be worries involved with buying a property. There's a huge sum of money involved and if you've done your numbers, due diligence, research, pounded the pavement to look at piles of open houses - you've mitigated your risks.

At the end of the day, the proponents of the renting argument versus the buying argument will always tell you renters trumps the day. At the end of the property investors argument - they will always need renters to pay their mortgage for them while they hold onto an asset that is earning income and the value of the property is more likely to increase with inflation. And when inflation increases? Property investors also hike up their rent. Which side of the fence do you wish to be on?

Time moves on and the mortgage payments becomes habitual and if you make extra repayments frequently, before you know it, you've paid off your mortgage! All these worries and concerns would plague me too but after a few weeks into the mortgage - it dissipated.