Buying a house to renovate

October 25, 2016

buying-a-house-to-renovate_mainThere’s a big difference between buying a house you will move straight into and purchasing a fixer-upper to make your own.

If you’re embracing your inner block-head and going for the latter strategy, here are a few things to consider to ensure you get it right.

Know your budget

As a buyer-renovator, your budget should have two components – the cost of the property itself and funds for renovations. For every property you look at and consider, it is important to work out exactly what renovations are required and what they will cost you, and whether this fits in with your budget. In contrast, if you have a vague renovation budget in mind without having worked out these specifics, you’re setting yourself up for a half-finished renovation and funds that don’t stretch far enough.

Know your limits

How much renovation work do you actually want to be doing? Are you willing to live in an unfinished house while renovations take place? Consider how much time, patience and skill you have for renovations and be realistic about the impact it will have on your life and relationships. Buying a house to renovate is big commitment and you need to consider all of these things to know what level of renovations you want to be doing, and therefore what type of house you should be buying.

Location, location

The old adage of picking the worst house on a good street is a solid strategy when buying a house to renovate. It is safer to bring an ordinary home up to market value on a nice street than to buy an okay house on a bad street and renovate it beyond the location’s value and standards. This consideration is important if you plan on re-selling for profit in the near future.

Focus on cosmetic updates

When choosing a house to buy you need to establish whether the renovations required will be structural, cosmetic or both. Try to avoid buying a house that will require structural repairs, as they generally cost a lot more, but don’t usually raise the overall value of the house to offset these costs. Look for a house with ‘good bones’ and with bathrooms and kitchens that are easy to update, and then focus on cosmetic renovations. Cosmetic renovations are the updates that visually transform a room, allow you to spend your renovation dollars on the things that people will actually see, and generally cost a lot less than what they return in market value, which is the goal if you’re renovating for profit.

buying-a-house-to-renovate_loungeAre there any planning restrictions?

Before buying a house, you should check with the local council’s planning department to see if there are any restrictions on what works you can do to the property. Perhaps you won’t be able to extend or build beyond a certain height. Also check if trees are able to be removed, if that is part of your renovation plans.

Are you renovating to sell, lease or occupy?

This will dramatically change the renovations you should be doing, your budget, the results you are after and the house you should be buying. If you are an investor hoping to rent the property out, you can generally get by with a few cheaper updates that will bring you greater rental returns. If you’re looking to renovate the home to sell immediately after for a profit, or ‘flip’ the home, you should focus on value-adding renovations that will bring you a profit. However, if it’s your forever home there’s much more scope and possibility for what you can do.

Get a building and pest inspection report

A building and pest inspection will make you aware of any hidden renovations you might have missed and any structural repairs needed. It will also alert you to anything that shouldn’t be changed or moved (for instance, if certain walls cannot be moved), which may interfere with your plans. It’s best to know all these details prior to purchase to help you make an informed decision.

Live in the home first

Understandably, a lot of people want to complete all renovations immediately after buying a house so they can move straight into their dream home, instead of living in a construction site with ongoing renovations. However, provided the home is in a liveable state when you purchase it, it’s a good idea to actually live in it for a little while prior to commencing renovations.

Once you have a feel for the space and know how you actually use it, this may completely alter your renovation plans. You may find that you’d prefer to focus on certain rooms, want to change the flow of the home or you might pick up on something that needs improving that you completely missed prior to living there.

Older home considerations

If you want to buy an older home, there are a few things to be aware of. Some building materials and styles are different to what is used nowadays and you might not be able to get new parts that fit or match as well as original fixtures. If it’s a heritage home, there will probably be restrictions on what renovations you can carry out, so as not to remove architecture or streetscape significance. In this case it is important to check with council and relevant heritage advisors or bodies what changes you will be able to make.

buying-a-house-to-renovate_heritage-houseSpeaking of older houses, asbestos can be a serious concern. Asbestos is commonly found in older homes in the insulation, flooring and siding. If there is asbestos in the home you are planning to renovate, you will need to get specialists in to deal with it, so this will be something else you need to factor into your renovation budget and considerations for the houses you are looking to buy.

 

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