When people are looking to buy properties, they are usually focused on the ‘entry strategy’. This is especially the case for owner occupiers and first time home buyers. However, odd as it may sound, we like to remind our clients that they should also think about the ‘exit strategy’ BEFORE they make the purchase.
By ‘exit strategy’, we don’t just mean the time horizon. It means thinking about whether the property will be easy to sell if the need arises, and who are the likely future buyers.
For example, some people do not mind living on a busy road because they have a high noise tolerance level. However, most people would find this to be an issue and the future resale market for such a property would be quite narrow. Therefore, the demand may be low and it may take longer to sell this property in the future. Hence the ‘exit strategy’ for this property would not be ideal.
In a good market, pretty much any property will sell at the right price. In a bad market, some properties may not sell at all, as buyers tend to be much more discerning. So when you are looking to buy a particular property, ask yourself how easy/hard it would be to re-sell this property in a flat or downward market when you are ready to move on in the future.
This is a great example of a property in a terrific location with timeless appeal. 43 Victoria Street in Roseville 2069 sold at Auction this weekend for $1.7 million to Liberal MP Paul Fletcher. Despite a slower market, this full brick Federation property which needs a major update still sold for a solid price. Here’s why:
- Location location location! Walk to rail.
- Solid house on level block of land (approx 700m2).
- In a tightly held suburb and street.
- Opposite a popular private high school.
- In the catchment of a very good public high school.
- Presents opportunity to add value by renovation, without too much fear of over-capitalising in this neighbourhood.
When the new owners decide to sell one day, chances are they will not have much trouble. Now that’s a comforting ‘exit strategy’ to have!
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.
