Jan Somers details her reasons for advising investors to look first at investing in residential property and not commercial property and she has a one word reason.

What happens when property markets correct? Not crash but correct because as Michael Yardney points out, that is what is likely to happen.

Margaret Lomas explains why positive cash flow property investment is not a strategy and how the same property, if owned by two different investors, could deliver a totally different outcome.

Finance broker Andrew Mirams tells us what valuers look for in a property and then we get a valuer to tell us about adding value to a property. Gavin Hulcombe tells us what works and what doesn’t.

Property investor and TV host Chris Gray has some tips on safe property investing.

 
Transcripts:
Andrew Mirams
Kevin:  Earlier in the show, we were talking to Gavin Hulcombe from Herron Todd White, who was talking about what improvements to a property actually add value. There is another aspect about values, and I want to ask this question of a financier, and that is what, in his opinion, do valuers look for in a property, and what are the key things that he’ll look at.

Andrew Mirams from Intuitive Finance joins us.

Andrew, thanks again for your time.

Andrew:  My pleasure Kevin. Thanks for having me.

Kevin:  In your experience, what is it that valuers look for? What’s going to impact the valuation of a residential property?

Andrew:  There are a couple things that a valuer would look at. Probably the first key is the way it’s presented, it’s aspect, is it neat and tidy, is it in a good state of repair, or is it run down, does it need work? All that sort of things a valuer will look at.

If instructed from a bank, they’re looking at how do they get out? If the client can’t meet their payments and they have to sell it, what’s their get out? How do they realize the property to get their funds back?

The first thing to get a great valuation is present your property really well. Tart it up. Make it neat and tidy, as if you’re almost preparing it for sale. So that’s probably the first tip: when someone’s having a valuer come around present the property as if you’re going to go sell it.

Kevin:  That’s a very good point. I just pick you up on that, too, I think valuers will look at it very, very commercially so you take the emotion out of it and they’ll look at it as a buyer will look at it.

Andrew:  Absolutely – and/or an agent would want to sell it to attract the best possible price. If you’re trying to get a premium for your property, please present it in a great manner. Also, it doesn’t hurt to have some evidence with you of how you might have arrived at that sales figure.

Kevin:  Yes.

Andrew:  I guess in terms of getting to a figure, just what do they look at? There are a couple of methods they’ll use. The first one’s called a comparable or comparison method. The second one is called a summation method.

With the first one, really what they’re looking at is your property might be a three-bedroom, two-bathroom, two-car-space in a suburb in Melbourne, Brisbane, Sydney, wherever it is. They look at like properties that are selling as yours, with a similar aspect, similar finishes, and what sort of market or what sort of salability they’re going for in your market. That’s pretty much how they get to a comparable.

On occasion when we get a difference of opinion, I guess it always comes down to a valuer’s opinion of what a comparable is and what a client and/or financier’s opinion of what a comparable might be.

The second method I said was a summation method. Really, that takes into effect the value of your land, the value of the improvements – it’s the house, pool, garage, landscaping, anything that might be in nature architecturally or anything else like that in relation to the property.

For example, in Melbourne, you can often get a great premium for your Edwardian,