Asking the right questions and other essentials when investing in property
Whether a modernised urban loft in Dubai’s upmarket business districts, or a sprawling villa in the suburban golf greens around the city, owning a house comes with its merits, both economical and emotional. We focus on ready-to-move in properties, and ask experts for the dos and don’ts of purchasing one.
Ask the right questions
While buying a ready property is much faster, there are several factors one needs to consider. “Buyers’ due diligence and asking as many questions as possible is very important, whether to the seller, the agent or even neighbours,” says Porush Jhunjhunwala, director at Banke International
Lewis Allsopp, managing director at Allsopp and Allsopp, says the right questions can sometimes reveal more about the place than what’s on paper. He suggests starting with questions such as, “What do you love about living here?” This can be particularly relevant in situations where you are looking to make the property your next home.
Allsopp says, “This is always a good question to get someone to open up and you can take a lot from the answer.”
Property maintenance and upgrades
Whether investing or moving in, it is extremely important to know if the property has been regularly maintained, from electrical to mechanical equipment and systems. It also pays to ask about any major upgrades that have been made, for example, an additional room or bathroom, or a balcony converted into a living space, as well as any issues that were fixed. “Ask about the maintenance — things like whether the air conditioners and water tanks have been cleaned and any major problems that needed fixing,” recommends Allsopp. “It is also good to be aware of any upgrades that have been made to the property.”
If looking to purchase an existing property from a private seller, it is prudent to hire the services of a registered, professional surveying company, advises Jhunjhunwala. “The upkeep of a property is the responsibility of the owner; surveyors can assess the property in question by doing a thorough check of the premises and can alert potential buyers to the risk of any future high-maintenance costs, particularly for properties that may sometimes remain unoccupied for several months,” he adds.
An existing tenant in a property you wish to buy for investment could feel like a boon, but can add to the complication and time associated with buying a property. However, if the intention is to move in, then it becomes all the more imperative to be in the know of the tenancy contract and the exact vacating details.
“If there is a tenant, then all details around tenancy should be clarified — when the contract ends. If there is a vacating notice in place, then ask to see evidence of the same,” says Allsopp. In either case, clear tenancy documentation and contracts help make the transfer process easy.
It is important to know the financial perspective of the buyer and seller, as it can be essential to determining how the property transaction will take place. This includes things such as whether the buyer is going to pay in cash or apply for a mortgage, or whether the seller has an existing mortgage on the property. Allsopp says, “If the property is mortgaged the buyer needs to be in a position to discharge the seller’s mortgage before collecting the title deed at the land department. The actual buying process is straightforward enough.”
While an existing mortgage does not create a roadblock, it pays to know of it in advance and factor it into your planning. “Ask if there is any finance outstanding. If there is, it is not an issue. It just helps you prepare for the process and the timelines,” says Allsopp.
Connectivity is a crucial factor for both investors and those choosing to live in the purchased property. For example, it is a well-known fact that properties located close to the Dubai Metro attract higher returns. Therefore, areas such as Dubai Marina or Jumeirah Lakes Towers, with their good transport links, have higher rental potential among working professionals. When looking to move in, connectivity to your place of work or schools can be important determinants. “Transport links to the places you need to go to need to be on your list of questions,” says Allsopp.
Grocery shops, restaurants and shopping malls, utility centres, schools and medical facilities are all important considerations when looking to move into a place. While investing, additional factors like proximity to the beach or parks can impact the saleability and price appreciation of a property. It is also advisable to get a feel of community life in your choice of property if you want to make it your home.
Costs and service charge
Beyond the purchase price, experts say other areas where costs could be incurred during the buying process include:
•Transfer appointment fee
•Transfer appointment admin fee
•Agency professional fee
•Mortgage registration fee
•Mortgage registration admin fee (if purchasing with a mortgage)
A recurring cost like a service charge should be ascertained early on, as it can greatly impact the total cost of ownership of a property.
Ready properties come with some inherent benefits. You pay for what you can see and feel. There is no uncertainty or risk involved in terms of securing your investment as the property stands completed. From an investment perspective, it allows you to choose high-yield areas based on surrounding infrastructure and neighbourhoods. And if you are buying to live in your new home, it means an immediate relief from rental costs and tenancy woes, or even travel time. But there are still some key questions one needs to ask the owner before settling on a property. And this due diligence can go a long way in securing your investment and your peace of mind.
The red alert list for ready property
1. Is the property tenanted?
2. What finances/mortgages are in place or required?
3. Is the buyer or seller abroad? Hence a power of attorney needs to be in place
4. Watch out for hidden fees, and ask for all fees to be documented on the contract
5. Check the service fees, as these can add a huge recurrent cost on top of the mortgage/existing property price
6. Survey the property to certify its upkeep, maintenance and value
7. Connectivity and facilities
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Collected and published by Arms &McGregor International Realty® editorial team. Get in touched with us at firstname.lastname@example.org