The fundamentals of buying a property


Expert Advice with Todd Hunter. 09/05/2016

You are buying a property that you want and that somebody else does not.

Now, there is a reason that they do not want it. And there is a reason you want to buy it. Your reason for purchasing is generally to create wealth. Essentially, you are banking on the fact that this property in this chosen location will increase in value plus return you an increasing income over the time you own it.

Their reason for selling may come done to various and unlimited reasons, many of which are either financial or they too think that this property will no longer increase in value but in fact, may drop in value.

Armed with this information, this means you should attack every purchase strategically.

Unless of course you accept the fact that you don’t want to research where to buy, and simply want to pay retail price for a brand new property. This concept of buying property at a premium retrial price is you accepting to pay whatever price the vendor wants to sell their property for. In what world does that make sense?

And boy, don’t owners of new properties make awesome vendors to buy from as the second purchaser in line. A bit like buying a second hand car. The first owner of a car loses thousands of dollars as they simply drive out the driveway. The second owner of that car, gets a great car with low kilometres for around two-thirds the price of a new car.

The same can be said for those buyers who purchase at the top of a property cycle. The next purchaser is in for a great buy at a discounted rate.

For many, this will be the biggest dollar value item they have ever purchased or one of a few large purchases they make in their lifetime, so treat it like it is.

So do this; before committing to a property purchase, imagine if you sold this property in the future and lost $200k in the deal. How long would it take you to save that $200k back? How would this affect your life, your lifestyle and your family? For most, they would NEVER recover. So treat this purchase with the respect it deserves. It’s not just a trophy you can brag to your mates about…

So to ensure this doesn’t happen, market timing is everything. Sure it’s a great location but I’m buying it when it’s at its cheapest. And because I invest this way, I see those vendors who lose $50k, $100k and yes, $200k, every week in my dealings. You don’t hear about them!

Who brags to their mates that they lost $200k on a property sale?

The old saying still rings true… one mans trash is another mans treasure. So thinking about the wHen you buy, from wHom you buy and wHat you buy can be just as important as wHere you buy.


Todd Hunter is director, buyer’s agent and location researcher for Sydney-based wHeregroup. He is an active property investor himself and amassed a portfolio of 50 properties by the age of 31. For more of Todd's musings, visit the wHeregroup blog.

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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