There is possibly no buyer more nervous than a first home buyer. Not only are you scared about what having a mortgage is going to do to your quality of life, but there are high stakes in getting on the first rung of the property ladder. After all, a bad move can cost money if the property’s value drops. Almost equally disastrous is the opportunity cost of a property that does not grow in value, or doesn’t match the median growth rate for that suburb. Not only are you looking for a home, but something to leverage off in the coming years when your growing family demands a larger abode.

So, how do you buy a property that is going to out-perform the median growth rate for the area? The obvious answer is to engage professional help. We hand-hold many first home buyers through this exciting phase of their lives and find it extremely rewarding. But budgets are usually tight and there are many young people out there who we cannot convince to part with the funds required to engage our services. So, if professional help is not an option, you will need to do the research yourself. Really get to know your chosen market and see for yourself which properties attract a lot of buyer interest and which ones don’t. You will probably have to compete harder for a property that will perform above the median. The duds will be pretty easy to buy…

Basically if you look at any ladder, the goal is to get as high as possible. If you can reduce the steps (by making the rungs further apart or by taking two at a time), then you are going to save money in the long term and climb higher in a quicker timeframe. The costs of buying and selling are so high that it makes sense to reduce the amount of property transactions over your lifetime. So the longer your first home will suit your needs, the better.

We often hear advice given to first home buyers to stretch yourself as far as you can afford (get used to being uncomfortable!) as the time before you have kids is the best time to build a solid foundation in the property market. This could set you up to be much more comfortable in future years for two reasons. Firstly, you may not need to upgrade so soon if you buy the largest home you can afford now. But you need to make sure it is in a good area. Alternatively, if you stretch to buy in the best area that you can afford, then you will have a greater chance of higher capital growth than if you compromised and bought in a lesser area. Sometimes, however, you will need to buy a smaller property in order to achieve this.

In his “Property Watch” column in last weekend’s Sun Herald, Mark Armstrong gave some advice along these lines. “Your first property is arguably the most important because, if you choose wisely, this asset will be the one that will set you on your way to building substantial equity through capital growth… When affordability is a pressing concern, it’s far better to buy a smaller property in a high capital growth area, than a larger property in a lower capital growth area.”

We firmly agree.

A lot of inexperienced property hunters think that renovating is a sure-fire way to add value to a property.

But this is not always the case. The first question that needs to be asked is whether you intend to live in the home for the long term or whether you are renovating for profit.

If you are hoping to add value then sell the property you really need to research the market and see what sort of end result is likely to sell well. We see many properties where the owners have over-capitalised or made such unique choices in their renovation that they actually make their home less appealing to everybody else and therefore less valuable. We see other examples of where first time renovators cut corners or do not consider their potential buyers when choosing finishes and end up with an end result that just doesn’t meet market expectations. There are so many issues to consider when renovating.

Even with a limited budget, there are some smart ways to add value without doing a complete renovation.

Of course, this really depends on what you are starting with. We have seen many homes with cedar or pine paneling that have been quickly brought into the “noughties” via a lot of white paint. Maybe you can simply knock out a few walls to improve room flow, add natural light and bring the outdoors in. If the floorplan fundamentally works, a good clean, a lick of paint and a new bathroom and/or kitchen can work wonders. If the house is dark and you can install skylights or enlarge windows, then this is a great way to transform a home. As a general rule, any improvements that increase natural light, create a functional floorplan or update a colour scheme, can have immediate impact on the value of a property.

Sometimes when pensioners or investors dominate the ownership of a building or complex we see historical pressure to keep strata levies low. The discretionary portion of the levy is the sinking fund contribution, so when building issues arise, or upgrades are required, there is no money in the pot.

So, what happens next? Either the issues are ignored, the building begins to look shabby, or a special levy is struck. And, if you are interested in capital growth, all these outcomes can negatively impact the value of a unit or townhouse.

It is now mandatory for owners’ corporations to undertake a 10 year maintenance plan and levy forecast. Those buildings with low levies will face sharp rises if the recommendations in their report are adopted. Those buildings that have been responsible in their financial management and avoided the temptation to keep levies too low will see much more modest increases.