Tips

How To Avoid Overcapitalising

No one wants their dream home to become a financial nightmare.

So if you’re building a new custom built home, how do you avoid overcapitalising your investment and losing money? Before we look at ways that you can avoid overcapitalising, let’s firstly examine what it means.

In simple terms, overcapitalising means overestimating the market value of a property or investing more funds into the property than it is worth at sale time.

Property investment always carries risk, but the golden rule is that property is a long-term investment and only in very rare instances do people make a ‘quick buck’. Short-term profits are not the norm and it is really, really important to bear this in mind when you’re planning on building a new home and working out how much you should spend.

It may be an old saying, but the line that ‘knowledge is power’ will never go out of fashion. Spend time doing your research. Find out about past and present house values in your area. Get in touch with the council to find out what infrastructure developments are planned for your suburb. For instance, are there any new roads on the cards? Any planned upgrades to shopping precincts, schools, community centres or sporting venues? Things like underground power and densification are important considerations when it comes to property values and you need to know the timing – and the type – of any commercial or council developments.

Read as much as you can about your suburb, go online to industry websites such as REIWA to get an overview of the kind of lifestyle that your area offers and get all the relevant market information, key facts, demographics and statistics which will help you make an informed, realistic decision about your new home build.

You can ask your local real estate company for information about median house prices, sales history, suburb growth and so on or better still, come and talk to us. Our boutique builders in Perth have decades of experience in the property and building industry and we’ll be delighted to share our knowledge to help you make the right choices.

Every road or suburb has at least one home that sticks out like a sore thumb. Maybe it’s the only double-storey home in a sea of single storeys or the only grand Tuscan villa with hand-carved columns and a double volume portico in a street of heritage homes – whatever form it takes, the ‘odd-one-out’ is probably going to be a hard-sell and whoever built the home may to struggle to recoup their investment.

Of course, your new custom built home can most definitely be unique and designed specially to match your lifestyle and individual taste but it’s always worth getting expert advice to make sure that it’s appropriate for the area and that you aren’t going to overcapitalise.

Here at Coast Homes, we use our decades of experience in the building and property industry to help you make the right decisions. We know all about building costs and the impact that the design of a home has on the total budget but we also know how to create beautiful ‘wow’ homes that are actually affordable.

Overcapitalising on a new home build is a costly mistake and we’re more than happy to share our expertise and experience to help prevent you from falling into that trap, so please pop in for a friendly chat.

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