Irrespective of your intentions as a property investor, it’s important to understand what makes your market tick. And I’m not talking about tenants here. Yes, tenants will keep your cashflow in check. But they won’t ultimately determine the end value of your asset. That’s up to the buyers.
Whether you’re planning on selling a property to unlock equity, looking to refinance, or actively seeking a new addition for your portfolio, recognising what influences buyers to pay top dollar will certainly work in your favour.
Not only do you want to discover what will draw purchasers in and engender sufficient emotional response to really want to secure a certain type of property in a certain type of location, you also want to know what will equally repel them.
Matters that might seem small to you or I could be quite significant to prospective purchasers. Hence, you need to make every effort to step into the shoes of a potential buyer and ask…what might make them run, and what might make them keen to offer the asking price?
To get you comfy in those shoes, here are 10 of the biggest ‘small things’ that can turn a potential buyer off and diminish your investment’s value or conversely, really float their boat…
More than just location
Investors are frequently reminded that location, location, location can be a winning capital growth trifecta…if you get it right. But what exactly does the ‘right location’ look like?
From major considerations like employment accessibility, to which school zone the neighbourhood falls in, there are many variables that can determine whether homebuyers will be willing to pay that little bit extra to live in a particular area.
- Everybody wants to work
Well, maybe that’s not quite true, but we generally need to make money if we’re going to service monthly mortgage repayments. As such, the diversity of industry and employment opportunities available in any given location (or lack thereof) can either reel buyers in or drive them away.
- Get in the zone
For family buyers, the question of offspring education will be a high priority, along with access to a variety of recreational and entertainment amenity in the local community. Remember, the more well regarded the local primary and secondary schools in the district, the greater the chance of drawing in cashed up mum and dad purchasers.
- Take a walk on the wild side
Or maybe you could catch a tram, train or bus instead? Either way, an increasing number of buyers are prioritising properties located in neighbourhoods well serviced by established public transport infrastructure and a high ‘walkability score’, as it’s commonly known.
This essentially means places where you can leave the more expensive car at home, accessing work, shops and leisure pursuits on foot, by bike or, if you live in Melbourne and can figure it out, with a magical Myki card.
- The price is right
At least you want to try to make sure it’s as close as possible. If you happen to be selling an investment property, anticipating and advertising an unrealistic price point can really get in the way of meeting your market.
Whether you over-inflate the asking price to give yourself some breathing space for negotiations, or just as the result of poor advice from an estate agent, quoting lofty numbers will alienate homebuyers and narrow your potential purchaser pool.
- Do you like what you see?
Logically, appearances matter when it comes to how much value the market will place on a property. And it’s not just the appearance of the building and surrounding allotment that will either work in or against your favour either. It’s the surrounding streetscape(s) as well.
Remember I mentioned earlier about seeking out a high appeal area with a diverse employment base? Well, make sure you don’t take that too literally and end up on the doorstep of an industrial estate, or a vast expanse of land nearby with commercial zoning for future development.
You should also pay close attention to the surrounding properties when considering what your market wants.
Noisy neighbours with obnoxious pets (or vice versa), and homeowners or tenants on either side of the fence who don’t understand the concept of ‘curb appeal’, can really drag the value of a property down. No matter how presentable you make it.
This is particularly the case when you’re considering a property investment within some type of apartment or townhouse complex.
- Is it retro chic or just old and bleak?
There’s no denying that everything old generally becomes new again. Many buyers love period and architectural features and will pay more for unique or quirky characteristics. But not everyone prizes circa 1985, brown brick veneer.
If you do plan to refinance or sell an investment property, the end result in terms of value gain will be impacted significantly by, whether or not the kitchen and bathroom need an upgrade for instance.
Buyers will always pay a premium for a ‘simply move your stuff and settle in’ type of property. Just ask any home improvement reality TV host!
On the flipside, if obvious work is required, this will be used to drive the price down in buyer negotiations and likewise, can compromise bank valuations.
- Let there be light!
An increasingly important consideration among young homebuyers in particular – remember Millennials will soon start to dominate the market – is layout.
Just as a modern kitchen and bathroom can work wonders when it comes to upping the price point of a well located property, so too will an abundance of natural light streaming in through large, picture windows into vast, open living spaces.
Awkward floorplans and poky rooms make it difficult for people to imagine living comfortably in the space, thereby diminishing that emotional tug at the heart strings you want to evoke in a potential purchaser; or a number of them.
- A place for everything…
Storage. Remember that word and use it wisely when you’re selecting an asset. The more the merrier when it comes to functional storage options adding value.
Secure car spaces are another big one; even if your buyer is a young, upwardly mobile Millennial who trams it to work and you’re trying to move a one-bed apartment in the city.
And remember…the tech revolution means more of us have greater flexibility in choice as to how, when and where we work. A dedicated home office will wow buyers into parting with a few extra dollars, when executed the right way.
- Speaking of technology…
High tech gadgets and gizmos, alongside decent Internet connectivity, have the same favourable impact as that dedicated home office.
- Time is on my side
At least that’s how you want homebuyers to feel when they walk into your low maintenance investment property. Everyone is busy these days; a syndrome of modern life I suppose.
If you can make a property seem less ‘beast of burden’ every weekend, and more self-maintaining, allowing residents to enjoy brunch and coffee in a nearby swanky café, you’ll be onto a winner.
Ultimately, it’s all about what the market wants.