I’m not a big risk taker when it comes to investment. But I do understand it’s essential to step out the comfort zone if I want to be financially comfortable. It may sound counter-intuitive, yet sometimes it’s really a matter of “who dares win”. Success is biased in that regard.
I used to own a small number of shares in one company many years ago. I did it as an entry point to see if investing in shares would do anything for me. In fact, I didn’t want to in the first place. But my family kept talking me into it so I thought OK, just give it a ago.
It turned out the volatility of share prices and all that was a bit too much for me to take. At the end, when the company was offering to buy those shares back, I jumped on it straight away and sold them. True, I made a tiny fortune out of it, but the amount was too small to mention.
Though being a conservative investor, I did have a thing about real estate. Having said that, I was never interested in buying something as an investment property, more so as an owner occupied residency. Put it simply, a place for me to live in. So, finally in 2006, I bought an apartment unit, signed the next 30 years of my life away by taking up a home mortgage – the biggest debt ever.
Over a decade later, it’s proven to be a smart move. So even a low-risk taker like me can have a crack at investment. That’s not to say, everything will go smoothly even if you’ve done all the right things and your “home work”.
My property buying experiences went from OK to bad in the very beginning, then from bad to worse towards the end. The last straw, just when I thought that’s it, it couldn’t have got any worse, then bang! I finished it on a good note. Those damn awful experiences include:
- The first property I was interested in had an on-going defect issue. It’d potentially cost a lot of money to fix it – my solicitor warned me not to go ahead. I listened to him.
- The second property I was interested in, one of the owner’s finance providers had a caveat on it. They refused to release it due to some unresolved debt issue with the owner. Later the owner claimed bankruptcy. The rest is history.
- I got gazumped. In case you don’t know what gazumping means, the owner accepted a higher offer after they’d already accepted mine. It sucked.
Obviously above mentioned are shorter versions of what actually happened. I found a bit depressing to revisit those bad memories but I believe by talking about my bad experiences here may help others, that’s why I don’t mind doing this. Anyway, at the end, I got nothing, yet still had to pay a big sum of money to the solicitor for the work he’d done. Certainly those unfortunate events taught me many valuable lessons, something money can’t buy.
I guess my message to anyone who’s going to enter in the property market as a buyer is:
- Research the market well, stay educated and be very careful. Nothing is certain till you’ve got the whole set of keys in your hand.
Another reason for writing this is a friend of mine and his wife are saving money to buy their first home. I thought I’d cover some key things here to help him prepare for what may come their way. So, here we are:
- Buying a property is an emotional process. It’s very easy to be drawn to those glossy marketing materials prepared by real estate agents. And when you do go out to inspect those properties, it’s also very easy to grow attachment to those houses that are beautifully presented. Some may well be outside your budget bottom line. Don’t go overboard. It’s a good idea to bring a partner along during inspection or even at auction, if he/she is more a head person. Because when it comes to one of the biggest investments in your life, you need to think more with your head and less with your heart. Anyone who can help you do that, take them with you.
- Real estate agents work in the best interest of their clients – seller, not yours if you’re a buyer. They may play games with you and that’s all part of their game plan and strategy to achieve the best possible outcome for their clients. Don’t be too surprised if an agent all of sudden starts ignoring you. Waiting is a big part of game playing. Be patient and keep your options open but within your limits/affordability.
- When your offer is accepted. Great! But it’s not the end of it. It’s only the beginning. Hopefully no other forms of drama pop up out of nowhere. From there, you’ll need to find a reputable solicitor to help you check all the nitty-gritty stuff in the contract and other relevant documents. Your friends or colleagues who themselves have gone through a similar process before and had a happy ending can recommend a good solicitor to you. Getting professional people to do the job through word of mouth or a personal referral makes good business sense. It’ll save you time and money or even headaches.
- Shop around for a good mortgage provider. Find one that offers competitive rates and also flexibility when needed. For example, a redraw facility, something you may consider should your circumstances change later or when you need a bit extra cash to deal with the unexpected expenses.
- Once you get your contracts exchanged, wait for the property to be settled (the standard period is 6 weeks but can be negotiated). The day you go picking up your house keys, it’s a moment of home sweet home. Celebrate! All bitter, hard work is behind you. Enjoy your new place, decorate whatever you like it and live it up!
Good luck to all!
Ted Tsai 