1 crucial differentiator between a renovator’s delight and a poor build

For this, he strongly urged investors to get in touch with professionals in order to avoid buying the wrong property, especially in today’s fluctuating markets.

Moreover, the property professional advised them to see the property for themselves instead of relying on photos online or on brochures. Often, these photos only show the best portions of the house in order to attract buyers.

After all, searching is not researching and it will do investors well to seek the ‘ground truth’.

“Let’s talk units as an example. When you walk into a unit, if you’ve got water stains all over the ceiling and it’s coming from above, it’s a waterproofing issue. Sometimes, when you look up the side of a unit block, instead of being a perfectly vertical wall, it’s bent like a banana. There's going to be structural issues there and they will cost you.”

“In houses, on the other hand, when you have a look at the external wall surfaces, you might see cracked brick works that go from the windows all the way down.”

Taking the time to visit different types of properties from varying price brackets, with the aid of professionals, can help investors spot opportunities and risks in a potential investment property, ultimately allowing them to make the best decisions for the growth of their portfolio moving forward.

“The more properties you visit, the better chance you have at spotting these anomalies. You can get an eye for it but you still need to consult building professionals – nothing will beat the subject matter expert,” Mr Waters said.

Independent inspections

Some of the properties for sale are often advertised with ‘pest and building inspections done’. However, Mr Waters encourage investors to have a separate inspection conducted before ultimately buying any property.

By conducting an independent inspection with a building professional, the investor can get a more in-depth insight on the faults of the property, both cosmetic and structural.

According to Mr Waters: “Not that the inspector hired by the vendor can lie or anything like that, but I always want the independent reports. That way, I can have a chat with the inspector. Often, what they put on paper versus what they tell you over the phone could be a little different.”

“Obviously, the ones on papers are full of disclaimers, but I think, as build quality goes, you have to consider that the cost to hold that property or the cost to operate that property will go up. That’s why the difference between cosmetic and structural faults is a big point.”

Purchasing a badly-built property can impact capital growth negatively as the potential of the value to go up decreases. Similarly, the cash flow and yield can take a hit as the investor continuously needs to spend on repairs.

Simply, a bad build can have a real negative impact on the overall investment.

For this reason, Mr Waters strongly encourage investors to get in touch with building professionals and other property experts before buying a property to gain an insight on it’s short-, medium- and long-term potential.

The cost of having a professional look into the property will always be a worthy expense, according to him.

“You have to do what’s necessary to keep the property habitable and safe. All property needs repairs and maintenance, but it’s about how much of them do you actually have to do? You have to make sure that your cash flow will not be impeded by continually doing them because of foundation issues.”

“That diligence beforehand will have a huge effect on the outcome in the years to play,” Mr Waters concluded.

Tune in to Steve Waters' episode on The Smart Property Investment Show to know more about the secrets of identifying a good investment property.