Tips about buying new apartments:3. What should be the criteria to choose an apartment?
Part 1
(to read part 2, click here)
Investment in a new apartment is one of the most important moments in the economic life of each and every one of us. Statistics say that we usually buy 1 – 3 dwellings during our life, so every mistake counts. The feeling of owning their home is deep inside the DNA of all Romanians (like the Greeks too). So, sooner or later each and every one of us will be tempted to think about this option. Many people consider that once they have the money, or the possibility to acquire a loan, they should rush and buy a property. But it is not so easy. A wrong property can become a bomb in someone's life, destroying his / her plans for the next decade. What should you have in mind before choosing the "home of your dreams"?
1. Relax! You don't have to buy literally today!
I see around me many stressed people, who are in a hurry to move to a new home, the one which will belong to them "for all their life". The ones who were in a hurry during 2007 and (especially) 2008 ended up how you all know. Frustrated, living in a home whose value is almost half nowadays. You don't have to follow their example. The market is here and it will remain stable during 2010, no matter what they tell you. You can visit many projects, talk to
several banks and finally try to create a combination which is good for YOUR interest. "I didn't have any other choice" some say. Well, you have. If you don't find what you want, don't invest. It can be safer.
2. Three important questions to reply
Sometimes we know when it is the right time to invest in a new property, but several times we just desire to do it, without to actually have the ability to succeed in this "personal project". What we want is not always what we can. So, we should ask ourselves three questions:
- Do I have available income to invest? Yes, you pay a rent, which can be paid as installment for a new loan too. Except the unlikely scenario that you pay a very high rent, you should also be able to allocate some extra euro too. Either you should have this amount every month, or you should have the equity so as to pay a serious advance. If the numbers don't tell you "proceed", maybe they just tell you the truth you don't want to accept.
- Do I find the proper financing tools? The banks are private companies, targeting profit by lending to you their money. If you accept to receive this money with 8 – 10%, it is not their fault that they give it to you. You can not go on if all the offers you find are very expensive. Either you need to search more or you should wait for better times. Just don't start with very high costs. Avoiding hidden bank costs.
- Does this investment really improve my life? It is not rare to find people who get enthusiastic with the idea of a new investment. They start searching but they get disappointed with the prices and they start the compromises. But if you live in an old apartment at Vitan and you want to buy another old apartment in a similar area, not in a really better neighborhood, without much better facilities around you, what is the purpose for the investment? An investment at your new home must really add quality to your life. If not, it does not worth the time and the money.
Without positive answer to all these questions, I would suggest to you to avoid proceeding.
3. This investment must be accepted by banks so as to be properly financed
A home is also an investment. It is not just the place you like to live today. Don't be fascinated by some nice furniture, or some arrangements you see already done. They are important ofcourse, but they should not be the main criteria for this move of yours. If you treat your new home as an investment, then you have to keep in mind the 3 main rules of an investor, when he buys a property.
First of all, this new apartment should be "Bankable". If a bank does not consider your investment good, don't be so sure that they are stupid. There is a possibility them to have right. In the end of the day, you see 10 – 20 properties and just this period, while they (are supposed to) see thousands of properties throughout the years. If a bank would not give a good loan for the property, it is a bad sign. You may need to sell it tomorrow and the future owner will get a loan too. If he will have trouble in obtaining it, your future price will go down as well.
4. If something changes, it should be easy to rent
Your new apartment must be "Rentable". Let us say that something happened and tomorrow you want to rent it to someone else. Try to choose something which will be easy to rent too. I know you don't invest today with this plan in mind, , but maybe some unnecessary modifications today will cost in the future. Keep all options at your disposal, you never know.
5. In case we are not very rich, whatever we buy should also be easy to sell too
Any property we buy should be "Easy to sell" too. Life can turn better or worse. When you buy a new property, you must take into consideration the possibility that you will sell it again to someone else. This is why you should sit down and think "who can be this person who will come and buy this property and for which reasons he will pay me more money". Trust me, not for your beautiful eyes… So, think twice the option to go to an area without good transportation means, or with other defaults. Be attentive with large apartments, or unconsolidated buildings. If you like walking 3 floors without elevator, there is a possibility that the next one will not share with you the same "athletic spirit". Keep your eyes open for visible problems which can hurt your interest in the future.
Why you might need to sell in the future? Because you…
- Will have more needs and you will want to move to a new, bigger home.
- May need to liquidate the property fast, if an urgent problem appears.
- Will move to a new home and you will use this one as investment.
- Will change job and you will prefer to stay somewhere closer to the new one.
Ok, if you are very rich, this is not the case, you can have plenty of homes. If not, it is not bad to think about the future too. A drop of wisdom today can save you from a bucket of tears in the future…
Tomorrow the second part:
- What's with the neighborhood?
- How important is the building?
- Constructed and useful sq.m.
- Parking lots and storage areas
- What yearly income you should expect, in case of renting?
And more…