Buying a home to renovate can provide a great opportunity for savvy buyers to add substantial value, but you need to be careful that your “renovator’s delight” doesn’t send you broke.
There’s a lot more to renovating a property than picking out paint colours and new fixtures. You need to have a well thought out plan of attack and know what you’re in for otherwise you run the risk of over capitalising.
Stick to a good location
Whether you’re buying to sell, lease or live in, you should always look for a property in an area with good capital growth potential.
The condition of a property is just one factor that plays into the overall value of a property and if property prices are going backwards then a renovation on its own may not be enough to add any significant value. You also need to ask yourself whether the particular style of property you buy is popular because in some areas new builds may trump an older renovated property.
Doing your due diligence on an area is paramount. Ideally buying property in an area that will see strong growth and where renovated properties are highly coveted.
Decide how much you’re willing to take on
There is a big difference between a property that requires a few cosmetic touch-ups and one that needs a total overhaul. Know which type of renovation you’re getting yourself into and what your overall goals are.
You need to be realistic about the amount of work involved. Getting a building and pest inspection and advice from builders and contractors before you make a purchase can help you decide whether or not any particular property is right for you.
Time taken renovating can take its toll on relationships and wallet so know what you’re getting yourself into before you jump straight in.
Consider your renovation budget
Before purchasing a property, plan your attack so you can work out how much your renovations are going to cost you.
No budget? Then you are asking for trouble and are more likely to end up overspending.
Check planning rules
You should always check your local council’s planning rules before purchasing a property to renovate in case there is anything that might prevent you from carrying out your plans.
Planning rules may restrict things like building heights, the ability to add extensions or even the type of paint colours you choose.