Shaun Nilsson’s Tips For Smart Home Buying
Buying (can be) as easy as 1, 2, 3.
Ahh… Investment. There’s often more than meets the eye to developing a sound investment strategy of any sort, and as one can probably surmise, real estate is no different. I often see uninitiated buyers taking consideration of some pretty questionable forces when estimating the future market value of their home (“But it’s the only three-storey on a street of bungalows” – Yikes!), so I thought I would go over a few things you may have missed in your calculations.
(1) Location. Obviously we all know by now that location is usually the most significant factor in terms of the pricing of a particular property investment – no need to dwell further on this general concept. However, one thing that new buyers overwhelmingly do not consider is how home shoppers other than themselves will view the property in the future. For instance: you may not care that there is no school nearby, because you don’t plan on having kids any time soon; but the future value of your investment will necessarily depend on one day attracting interested buyers – and the more, the better! Ignorance of these sorts of considerations will mean that fewer folks will be inclined to want to purchase your listing – ultimately resulting in a lower resale price. Have you thought about proximity to transit? With the way the world oil market is going, gas prices will force more and more buyers onto the subway routes. How about waterfront property? Here’s a clue: they aren’t making any more of it.
(2) Zoning. Has your Realtor looked into the zoning regulations in your area? Maybe not – but there are two good reasons to do so, and they go hand-in-hand. For one thing, the properties around you are permitted to build anything they’d like (a bit of a generalization, I know) as long as it conforms to the municipal zoning for their lot. That means that if your neighbour has a mixed-use allowance, there could be a commercial property moving in beside you at some point. How will this affect your resale value? The corollary, of course, is that you should look into the zoning of your own target property. Are multi-unit dwellings going up all around your detached home on similar-sized lots? Hmm… might be something to consider when looking at the future value of your investment. A good start is to always ask, “who might I sell this property to one day?”
(3) Upgrading. Since the emergence of the “flipping” phenomenon and resulting television shows several years ago, everyone has become aware of the advantages of upgrading their property. But are there ground rules? You bet. One thing to always be aware of is that – as we already know – location rules. How does this affect your upgrading and resale plans? You should never plan to upgrade a property much beyond the neighbourhood it sits in. A smart investor will identify a potentially upgradeable property as one that currently is somewhat less well-appointed than the surrounding homes. If everyone else in the ‘hood has granite, stainless steel and a walk-in, and your target doesn’t – go for it! But there’s no financial sense in building a top of the line luxury home in a “value-priced” area. You won’t get your money back.
Ultimately, the short answer is to just stop and think of the big picture. Put yourself in the shoes of a future buyer of your own property. Who’s shoes are you now standing in? A single person? A family? What kind of money do they make? What would be important to them? Nine times out of ten, people are buying homes just like you are – based on the best set of compromises they can find for all of their wants and needs, and within their price range. Identifying a property that sits comfortably within a broader scope of other people’s needs and ideals will make for a relatively easier and more profitable selling experience later. And that’s good investing.
Do you have a question about your investment strategy? Feel free to connect with me at shaun@shaunnilsson.com . I happily answer all of my e-mails personally.
Until next time,
Shaun Nilsson,
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