By Jarrod McCabe and Brenton Potter
When we sit down for our first meeting with clients, there’s a common list of questions we are often asked. The answers not only reveal the principles and processes that underpin our property investment advisory, but also provide valuable knowledge and advice about Melbourne’s property investment market more broadly.
That’s why we’re sharing the seven most frequently asked questions from clients, along with our insights and answers.
As an investor, should I buy a renovated property, or should I buy something that’s unrenovated and then add value to the property?
From an investor’s perspective, it’s crucial to strike the right balance between the underlying land value and the cost of improvements. If you end up paying too much for renovations, it can impact the long-term growth potential of your investment. Ideally, you’re looking for a property with renovations done 10-15 years ago, one that still has plenty of life left. This way, you can add value over the next decade or leave that potential for the next buyer if you decide to sell.
The extent of previous renovations also matters. Properties renovated 20-30 years ago may have solid structural work in place, even if they lack cosmetic appeal. These types of properties offer a great opportunity to add value, not only from a capital growth perspective, but also in terms of rental returns. In the current market, where many are cautious about renovations due to high costs and challenges with trades, having trusted connections in the industry can make a big difference. This approach allows you to boost both property value and rental appeal quickly, especially in a competitive rental market.
Bricks versus weatherboard, what’s the better option?
We often find that clients come in with preconceived ideas. For example, many say, “I’m only going to buy a brick house.”
If you compare two similar properties in a suburb where both brick and weatherboard are valued equally – same size, floor plan, and condition – brick will often command a premium. But it’s important to recognise that in certain Melbourne suburbs, weatherboard homes are the norm. For example, in Brunswick, Thornbury and Northcote they are the predominant older style housing stock, and very much appreciated, while in areas like Carlton or Fitzroy, brick is not only preferred, it is expected. This makes the choice largely dependent on location and local buyer expectations.
It’s also worth remembering that maintenance is part of owning any home, whether it’s weatherboard or brick. Double brick can be costly to renovate due to the heavier structure and foundations, while weatherboard homes tend to be easier and often more affordable to make amendments to.
How long should I expect it to take for you to find me a property?
We don’t set a strict time limit on finding the right property. If it’s an investment property, our focus is on key factors like the architectural style, the ideal street, the location, and nearby amenities. Depending on market conditions, that can take anywhere from two to three months or sometimes longer. Of course, if we find the right property sooner, that’s great.
For investment properties, it’s about finding the best available option for a given budget and ensuring it meets the right criteria.
However, for a homeowner, where the requirements might include specific features – like a certain number of rooms or a location within a particular school zone – the search can sometimes take longer.
When buying an apartment, is there a preference for a particular level?
When selecting an apartment level, there are a few factors we weigh up. For instance, ground-floor apartments often come with courtyards, which can be valuable, but in some suburbs, they might raise security concerns. First or top-floor apartments, especially at the front of a block, can offer beautiful views, but there’s the consideration of stairs – particularly in older-style blocks – which may or may not appeal to certain buyers.
There are pros and cons to each level: ground, middle, or top. It’s definitely not a one-size-fits-all approach. For example, a top-floor apartment might boast stunning city views, or look out over the bay. However, we’ve seen situations where people are put off because the balcony is too windy and cold to use comfortably for much of the year. So, it really depends on individual needs and the specific apartment.
How do you handle negotiations?
Negotiation strategies can vary widely based on the scenario, so our approach is always adaptable.
Many prospective clients aren’t aware that different agencies follow different rules for negotiations. To give a few examples, some agents follow a ‘highest and best’ scenario, where there’s a set deadline for all offers, and you simply put forward your best. Other agents might use a more transparent process, disclosing each competing offer so you can adjust accordingly. In some cases, agents don’t disclose specific amounts but will let you know if your offer has been beaten. Additionally, some negotiations may even revert to a boardroom or online auction format, where all offers are visible to participants in real time.
Once we understand the agent’s approach, we can devise a plan for submitting offers and negotiating to achieve the best possible outcome. For private sales, our strategy is usually straightforward, but negotiations after a home has been passed in at auction can differ significantly. For instance, if we’re the only bidder and the property is passed in to us, our negotiation tactics would differ from a scenario where multiple parties were involved, and we just missed the reserve price. Knowing the parameters and position is critical, as it allows us to put our best foot forward strategically.
Do you have access to off-market properties?
For those unfamiliar with the property market, there can be a perception that off-market properties are part of an exclusive, hidden world that only a select few can access. While we do handle off-market transactions, it’s not the most common route. Many off-market properties we encounter often have some type of compromise or are used by vendors to test the market, typically with higher price expectations.
From a vendor advisory perspective, off-market listings can also be a tactic agents use to secure a property listing. Often, an agent will suggest testing the market off-market, implying that a high price might be achievable. This approach can lead to listings with vendors who aren’t fully committed to selling and may have been offered overly optimistic pricing.
The key with off-market opportunities is understanding the vendor’s motivation to sell. In many cases, we find that vendors aren’t especially motivated, which impacts the likelihood of a successful transaction.
What happens if you have two clients on any one property?
We never represent two clients on the same property. It’s a common question, but if we’re already committed to one client on a property, we won’t take on another. Occasionally, a client may reach out about a property we’re already handling for someone else. In that case, our first response would be to let them know we can’t assist and, if possible, suggest someone outside our office who could help.
There are also times when we’re assisting a vendor from an advisory perspective, and a client inquires about the same property. In these instances, we clearly inform the client that we’re already committed to the vendor side and can’t represent them. Our priority is to ensure there’s never a conflict of interest or any chance we’re working for two parties on the same property.
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