Relocation Relocation host, Veronica Morgan, warns against rushing in when it comes to buying property.
Talk about a trap for young players…
Goo and John were looking for a new home and complete change of life. Goo fell in love with a property that was outside their budget and gave into impulse, making not one but two offers within hours of first seeing the house. The second offer was way above her budget and by making it so quickly she has shown her hand and given all of her bargaining power to the selling agent and the vendor.
She also did not give a deadline for the offer to be accepted and contracts to be exchanged, so it was left “hanging” while the agent and vendor continued to show the property to other buyers. They knew how keen Goo was, so they weren’t inclined to feel any pressure to accept her offer.
Also, the property had only just come onto the market and by making the offer so rapidly she only served to encourage the vendor to think that other buyers may also act rashly, another reason that they would delay sealing the deal. On the flipside, she could easily be paying too much…
Lastly, if she was prepared to stretch her budget by $70,000, who knows what other opportunities could be out there in this new price bracket? And when you compare this property to those other properties, this one may not look as appealing as it does when you compare it to cheaper homes.
However, when you have such specific requirements, sometimes you do need to pay a bit extra so that you don’t miss out on your dream home.
Now, when it came to their investment property, Goo was much more willing to apply the “numbers” when making a decision. The only problem with this approach was that they had made the location choice based on lifestyle and emotion. In this case, Mission Beach is a beautiful place, but has had minimal capital growth for some time and the rental returns are not even 5%. You can get similar rents (at a minimum) and better capital growth by buying in capital cities. If you want a long term investment in a “lifestyle” destination, you really can’t get hung up over the numbers. It is hard to reconcile dreams with good investment returns.