Further thoughts on reviewing the market

There seems to be so much to expand on following my previous blog, especially when I have heard some off the cuffs comments people make when they inspect a property.  It can be off-putting to hear something like "I don't like the bathroom", "that bedroom is painted an awful colour", etc. and in the big scheme of things that does not have that much bearing on the valuation. What are the important questions to understand when accessing the real market value?

Land

• The location of the land, view, and suitability for the family in terms of terrain, size, and accessibility for parking, and kids playing, as well as proximity to schools, shops, bus, etc.
• The current value of the land in the area, taking into account the pros and cons.
• The expected increase in the price of the land over time (its potential).
• Consider if it is worth buying a house that is affordable, with the idea of upgrading in a few years, or rebuilding. renovating or relocating.  These are worthwhile thoughts irrespective of what the future brings.

House

• How much work, how much effort, and time would be required to make this building into a liveable home?.
• Who would do the work? 
• Would any approvals be required, and would the home be liveable in the meantime, especially if the structure has to be altered?
• How much money it would take to extend/refurbish?
• Approvals take time, and time means money.
• Will it be possible to do these improvements without wrecking the budget, bearing in mind plumbing, rewiring, roofing and restumping can be expensive.
• Is it worth the cost for the long term gain, or should it be a short term goal to sell after a few alterations and move on to the next home when appropriate.

Another thought comes to mind, is to consider if these planned improvements will require sub-contracting out various tasks of the project.

For the inexperienced buyers

• Check the council zoning to be sure your plans will be approved.

Sometimes it might be surprising to find the land far outweighs the value of the building on the land, and this does not mean the land is a bad investment.  As years go by, the once out of town houses have become prime real estate, in spite of their age; particularly when it is close to the city, bus-ways and an area that has full infrastructure in place. Fortunately land does not age and is desirable for other purposes, whereas buildings can become neglected if not maintained.

The obvious things to me now are, over the years the land becomes more valuable and the building may not, unless it has been constructed well, and solidly in the first place.

Refer to Chapter 6, Invest Wisely, Page 18