WHAT FEATURES BOOST BANK VALUATIONS?
Q: Are there any tips you can provide me about what bankvaluers particularly look for in a property? We’re looking around for a property to buy and renovate, so it would be good to know the things we should have our radar out for.
A: There certainly are a number of fundamentals that will either boost or lower a property’s value – in the eyes of a lender.
There are too many to list them all here, but following are some of the biggies.
Lot attributes, such as topography, size, shape and aspect – for example, a level or gently sloping block that’s a neat rectangle, with elevated water views, is going to be worth a lot more than an oddly shaped block that’s steep and rocky and overlooks the freeway.
Street frontage (which is basically the width at the front) – the bigger the better. The same goes for property size: big is good. The more bedrooms, and up goes the value. Renovations that extend the property either out or up to increase floor space will have an advantage come valuation day. Off-street parking in suburbs where parking is tight is also a big tick. And you want good infrastructure, like shops and public transport, close by – though not necessarily right on your doorstep so you get all the associated noise and parking congestion.
A well-maintained property with a practical layout impresses. The condition and overall appearance of the property, and how comfortably it sits within the streetscape, will all be taken into account.
Modern, well-equipped kitchens and bathrooms definitely add value. Fixtures and fittings just need to be appropriate to the value of the property, so don’t go overboard if you’re renovating a fibro house in the suburbs.
A valuer judges the property as it is on the day, so there’s absolutely no point sermonising about all the renovations you’re about to do. That said, he or she will assess potential – things like whether a second storey would afford harbour views or if the block could possibly be split.
FINDING SUBURBS TO RENOVATE IN
Q: Everyone is trying to find the next ‘hot’ suburb. Are there any indicators for this, or research you can do topredict the suburbs that are going to be the next movers and shakers?
A: If anyone could 100% accurately pick the next hot suburb, they’d be Australia’s richest person! That said,many people have become very wealthy through property – and that’s not by accident. And it’s not dependent on any particular property cycle. It’s about having a formula that reliably weeds out the diamonds from the duds. At the moment, market conditions are highly variable right across Australia: some capitals are booming, some in recovery, others in the doldrums. And then even within each market there are pockets of good and bad.
So your skill as a property expert is to identify the suburbs most likely to see good capital growth, moving forward. And that’s basically about number crunching, research and footwork. Without giving too much away, there are a few indicators of a suburb worth further investigation.
If nearby suburbs have seen good growth, that’s promising. Those who can’t afford to buy in the suburb of their choice will need to look at the less desirable suburb nearby, which will inevitably push up prices – and the amenities of the ‘poor cousin’ – over time. It’s called the ripple effect. Inner-Sydney suburbs like Alexandria and Balmain began their process of gentrification this way. They were ugly ducklings once.
If there’s a new infrastructure development in the pipeline, such as a new freeway connection, shopping centre or community development scheme, that’s a good sign. Things could change literally overnight.
Scrutinise the data for suburbs on your radar. A lot of the information you need is available free on real estate and government websites. Look at the median growth of properties over three months, 12 months, fi ve years and 10 years; rental vacancy rates; average number of days properties are on the market; changing demographics (is the suburb changing from a high proportion of singles to more families; from a suburb full of renters to one with more house-proud owner-occupiers?) … All of these figures together build a picture of the suburb that will help you assess its potential. Understanding and accurately interpreting those figures, of course, is something you might need to educate yourself on. But that’s ultimately what separates the expert from the novice.
FLOORING CHOICES FOR RENTAL PROPERTIES
Q: The carpets in my rental property are really tatty andneed replacing. As the current tenants are moving out,it’s a good time to get in and replace them. Or is there a better option you can recommend?
A: Personally, I really dislike carpets and would neverconsider them for a rental property. They stain easily, pick up odours, and will invariably need replacing at some point, either because they’re worn or ruined or because they simply date the place. I much prefer hard floors that are easy to keep clean. Depending on your property, that could be polished floorboards, a floating laminate floor, or even some of the great vinyl flooring options on the market at the moment, such as Gerflor, which is available at Bunnings.
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