You may be tempted to buy a house to renovate, particularly if you’re capable of fixing things yourself. Before you buy a “fixer-upper” proceed with caution. The first and most important aspect is to understand the size and cost of the project. One renovation project may differ substantially from another.
Choosing the right home to renovate could ultimately get you a property in an area that would otherwise have proven unaffordable. So, renovating the right property may well be worth the effort.
The level of renovation required may vary from house to house. It is this that you must take into account when making the decision of whether to buy or not.
Renovation has become increasingly popular, but it is important to consider the cost and inconvenience of such a project.
Your reasons for renovating will impact on the decisions you make. The costs and choices will differ depending on why you’re doing it. If you’re renovating to sell as soon as you’re done, you must always consider the eventual price that you will get for the property. This will drive your choice of finish as you ensure that you don’t overspend.
If, on the other hand, you’re renovating to create your own dream home, you may choose more luxurious finishes, since you’ll hang onto the property over the longer term and should enjoy the fruits of your labour.
Costs vs Value
It goes without saying that you must estimate the costs to renovate and the subsequent value of the property. Investing 30% of the value of the property in structural enhancements could yield an increase in value of up to 80%. A 9% investment in cosmetic improvements may improve the value of the property by 35%.
Consider also the hidden costs. If you have to rent for the duration of the renovation, for example, you must account for these costs. And don’t forget the emotional cost, including the stress and anxiety of managing a major project.
Look out for major issues
Renovating is not for the faint hearted. Tread carefully. Make sure that you get a pest certificate and have it analysed by a professional. Look out for major issues like electrical wiring, asbestos, and wood rot. Plumbing may also present problems. Add a bathroom or moving a kitchen may not be as easy as you think.
If you’re buying a heritage conservation area, find out from the counsel what renovation guidelines exist.
Renovating an apartment
When you’re looking at buying an apartment to renovate, it is important to understand the body corporate fees, in particular the sinking fund. While you’re about it, check the unit plans and layout. You must also find out exactly what is allowed in the building. Remember that items such as plumbing may be in the ceiling of the apartment below yours, so moving the plumbing may not be possible.
Understand the limitations of the building and get the advice of an expert before your start. Buying to renovate can be a rewarding experience but you must undertake such a project with caution.