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In this post Iāll cover off what Iāve learned about buying in a soft market, and how Squirrel can help beyond simply arrange the mortgage. Between 2010 and 2013 I ran a service called first home makeovers. Its purpose was to help first home buyers buy well, and renovate to make equity in their new home. Along with a business partner I also bought, renovated, and traded a number of properties personally.
Thereās three key points I want to make:
Getting a property for a great price is hard work. Most of our effort went into the buying. Finding the right property, at the right price. But itās worth it. The key principle we learned time and time again is that you make your money when you buy.
Even if you can make $50,000 when you buy, thatās tax-free and has to be worth the effort. Think about how long it takes to save $50,000.
Finding a good deal means looking at a lot of properties. I would spend hours going through Trade Me at least twice a week. Properties I thought were interesting Iād put in my research folder. Iād then do preliminary research on them from my desk and draw up a short list to physically visit. Iād typically identify 50 properties a week that I would research and visit perhaps 5.
The first thing you need to do is work out how to search. It used to stagger me how often someone would show me a property deal I hadnāt seen in my own searches. Search comes down to key words like:
Iād often browse entire suburbs I liked, just to make sure I didnāt miss anything.
Once you get your search criteria nailed down, itās time to identify opportunities. My research would involve the listing information:
Sometimes over-marketing can also help. There was a property heavily marketed for sale in Avondale clearly in need of a major do-up. Because it was so heavily marketed, I discounted it as an option. That was until I realised on the day of the auction that (1) it was at the same time as an All Black test match, and (2) the weather was miserable, and it was an on-site auction. I apologised to friends, quickly drove to the auction and won it.
Once opportunities have been identified, I then use a tool like Valocity or Corelogic to get a better understanding of the vendorās perception of value and of its genuine market value. What you want is a perception gap, which usually means theyāve owned it for a long-time, or donāt live there.
If I was still interested, Iād then jump into the Auckland Council GIS Viewer and look at services, contours, aspect. If you havenāt used this before, just jump in and have a look. It's impressive.
Research helps manage the effort. If I had questions Iād call or email the Agent before even deciding to visit.
There is no point doing the work and then not putting in an offer. Youāll never buy anything if you donāt put in offers.
In my mind every property has a price at which youād be keen to buy it. On any property, just figure out what that price is?
But donāt be a tosser. Some people take the ālow-ballā offer to the extreme and miss out on otherwise good opportunities. My view is put in offers that are capable of being accepted and donāt negotiate. I generally only ever put in one price.
This principle is also about not getting caught up on āthe oneā. Youāll feel a damn sight better knowing you got a bargain then thinking you paid too much for something.
We can help with the mortgage but often will also need to help navigate property issues. Bargain normally also equals some sort of problem like a defective title, monolithic, consent issue etc. Weāre used to navigating this stuff for our clients.
Beyond that, we have a unique product called the Squirrel Homeowners Loan. Itās a peer-to-peer personal loan with no fees that can be repaid at any time and it has a low rate of 7.95% interest-only for the first year.
Clients use the Homeowner's Loan to pay the deposit when buying, or to renovate when they settle and before they move in. Because itās interest-only for the first year, it doesnāt impact much on cash flow, and it can be consolidated back into the mortgage at any time at no cost.
For further information, get in touch with one of our mortgage brokers NZ. If you want to find out how much you can borrow for the house, or what your repayments would be, give our mortgage calculators a whirl.
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The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Squirrel shall not be liable or responsible for any information, omissions, or errors present. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. We recommend seeking professional investment and/or mortgage advice before taking any action.
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