A famous Hollywood actress once proudly said: "I make a very good housekeeper: every time I divorce, I keep the house". She was married nine times. But this week we are going to be looking for one house only. Owning your home means making an investment in your family's future: it is one of the key building blocks to long-term investment planning that I discussed in the first PF University class. When you do make the leap toward home ownership, try to stay put in your property for at least five years - incidental costs such as repairs and maintenance usually add up to a lot more than you bargained for. Nevertheless, armed with your pre-qualified mortgage, you are now market-ready and will be well ahead of the competition.
But don't forget the three most important words in property: location, location, location - or "setting, amenities and local area". You must above all look for a manageable and resaleable property. The right "setting" may mean accepting a smaller house in a very desirable street; please, do not be tempted by a fantastic property located on a terrible street. Ask yourself whether you would be able to rent your property out without too much trouble.
View the house on different days, at different times and in various weather conditions: a quiet residential street may become a shortcut for drivers during rush hour. Don't be put off by an ugly interior; imagine the rooms empty and make sure they are of the right size. You don't want to be cramped in a small kitchen or have a huge balcony attached to a small sitting room. Take some friends on a tour of your choice and ask for their opinion.
The "amenities" in the area may offer important pluses. You should check out where you can travel to on local transportation, and even on foot, during rush hour. Are there good doctors and dentists nearby? What sorts of schools are in the vicinity? Ask the police for feedback on local crime. How about parking areas, good local shopping facilities and restaurants? Pollution, noise, personal outside space and parks, public (or private) swimming pools and health clubs are all lifestyle factors that can affect the ease of selling or renting.
Remember, it's not just a home, it's also an investment, a valuable asset in your portfolio. Finally, "local area" relates to the wider environs. If everybody wants to live in a particular development, you can be sure that hype and speculation will play a part in high prices, which will likely put properties beyond the means of ordinary people. It's therefore worth considering up-and-coming areas surrounded by already improved zones.
If a house is affordable, more people will be able to buy it - and selling it will be easier, too. When estate agents, dry cleaners, opticians, coffee shops and florists open up in a new part of town, it's a pretty safe bet it's on the way up. You might also want to check out municipal plans for the neighbourhood. The million-dollar question you are probably asking yourself now is "how much"? From 1997 to 2007, property prices in the West grew by an average of 20 per cent per year, but wages did not enjoy the same increases during that period. As a rule of thumb, two and a half to three times your annual salary is an affordable amount to spend on a home.
If you are thinking of anything more, first take a cold shower, then, don't do it. Interest rates are relatively low at the moment, but they will rise, and when they do you could find yourself in serious trouble. Buy what you can afford, not what you would like to afford. John McGaw is a financial adviser based in Dubai. Contact him at firstname.lastname@example.org