If you’ve ever chatted to us about our business, our buying strategy, or real estate more broadly, you’ve no doubt heard us drop the term ‘a Milk Chocolate property’ when alluding to prospective purchases. It’s our way of referring to a property that has all the hallmarks we deem desirable.
When we purchase a property, we’re keenly aware that we’re buying a very unique asset. To that end, we’ve handcrafted our ethos and buying strategies to assist our clients in achieving the greatest return on their investment. These are our clients’ insurance policies, and at any point in time, allow our clients the ability to manufacture equity and increase their yields to ensure their portfolio is working as hard as it possibly can.
As part of our buying strategies, some of the things we look for are standard and some specific to Milk Chocolate. Ideally, we want flat blocks, no pools (for an investment property), functional floor plans that suit modern living and north-facing living zones to maximise natural light and warmth in the home. The scrutinising lens of our Purchasing team, led by our National Head of Acquisitions, Brad Purcell, also scans for a few more unexpected details – these are often the particulars that truly signify that a property is worth pursuing.
Curious about how a property qualifies for our exacting standards? Here’s a little peek behind the curtain.
Location, location, location
One of the critical steps in our purchasing process involves leaning on robust data and research to understand an area’s past, present and future.
Some of the key things we look for include planned and proposed infrastructure projects and investment, foreseeable gentrification, and evidence of historic performance. Using analysis gleaned from our Senior Economist, Dr Kevin Hoang, we investigate the multi-layered economic drivers that might influence a property’s long-term capital growth. We call on roughly 35 key indicators and have carefully set the thresholds to ensure the suburbs we select will provide long-term stable capital growth.
Another crucial step involves sniffing out potential drawbacks: “Key no-gos for us are busy roads (main roads or thoroughfares), an undesirable aspect for the region, potential flight path noise, negative planned development, and, from a property perspective, capital improvement that has exhausted all of its potential value,” says Brad.
Archetypal character
There’s a common thread that runs through many of our properties – one that’s almost immediately identifiable. We tend to opt for character homes that typify a particular area: think grand Victorian terraces around Sydney, federation dwellings in Melbourne, and quaint weatherboard cottages in Newcastle’s inner suburbs, for example. Effectively, we are buying homes with a certain breed of character that otherwise can’t be replicated. They are also generally proportioned, potentially boasting larger room dimensions and high ceilings, for example.
Not only do these properties retain much of their aesthetic charm, but they also boast superior structural qualities – for the most part, older homes were built to last. Those that haven’t aged too well are also given heavy consideration in our property search; a core part of our purchasing strategy involves looking for a property that we can renovate to add value.
Brad adds the final reason we prefer character homes – and it’s all to do with maximising our client’s investment.
“Character homes specific to that region tend to attract the largest potential target market,” he says. “From a resale perspective, these homes are likely to generate a very strong emotional connection with potential purchasers, increasing the likelihood of a premium outcome.”
A decent block with lots of potential
Another advantage of character homes is that they typically come with larger blocks. Land was significantly cheaper back when they were built, so having a sizeable garden or a garage was more or less standard. And, as we know, land is the thing that appreciates in value – not the buildings.
When we research properties, we look for those that offer above-average land size for the area. This is largely because land is where most of a property’s value lies. But it’s also because more land offers more options; it means we can look to extend a home, build a granny flat, subdivide, or simply make the most of the yard space. This is a win for the occupier, but also for the owner when it comes time to sell – each of these can add serious value to a property.
If we’re purchasing an apartment, the size of the complex is a crucial factor, too. This time, however, we think small: “Any building we consider must be boutique in nature, with a minimal amount of other apartments on title,” says Brad.
A quality and consistent build
Before we make a purchase, we hand over a potential property to our Construction team for a final appraisal. Their role is to assess the quality and execution of the build, and examine the property to see where we can add value through renovation or further construction. (We’re aware that our clients might never want to renovate, however, knowing there are opportunities to do so will make the home more valuable in the long run when our clients are looking to sell.)
Prior to that, though, Brad casts a discerning eye over the property to check for uniformity across some of the finer details. He assesses fittings and fixtures, cornices and architraves, tile selection in wet areas and, if there are floorboards, the timber or type and the laying technique. If a property has been renovated, he looks at the wardrobe cabinetry to ascertain whether it’s a custom-built solution or one boasting large gaps. The latter indicates it’s an off-the-shelf product designed to save money.
Finally, Brad looks for minute consistencies that many may overlook: “It sounds silly, but I inspect power point and light switch selection,” he says. “Generally, people who are prepared to pay the appropriate funds for a quality renovation will update all of their switches and outlets to be consistent throughout, not just in the newly renovated section of the home.”
Ready to purchase a Milk Chocolate property of your very own? Contact us today.
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