Is that property worth renovating?
After more than two decades of renovating experience, I’ve learned to spot the diamonds from the duds pretty quickly. Here are some of the things to keep top of mind as you’re assessing a property to buy and renovate:
1. KNOW WHAT REPAIRS COST
Knowing the approximate price of what things cost to fix is a major advantage. It means you won’t be fazed by problems that might scare other buyers off, like concrete cancer or a total rewire job, because you can estimate the cost of repair and factor that in – and even use it as a negotiation tool to get the price down. Having a good idea of costs means you can do a rough crunch of the numbers as you’re walking through a property and know by the end whether there’s profit potential in renovating it.
2. AVOID MAJOR BUYER OBJECTIONS
I have a list of big no-nos I would never consider: buying on a main road or beside a railway line, or a house that sits below street level… these are what I call “major buyer objections” and there are a heap of them. No renovation will ever fix them. Move on.
3. IDENTIFY SCOPE FOR IMPROVEMENT
If you can’t substantially improve a property and uplift its value, whether through a cosmetic facelift or significant structural changes, then it’s not worth bothering with. Older properties offer the best pickings for structurals, as there’s obviously more work to be done, whereas cosmetic renos. are well suited to properties of a certain age and style. And you want to be familiar with what type of renovation works for the particular style of property you’re looking at, whether it’s a timber cottage, federation terrace or brick semi.
4. ENSURE THE PRICE IS RIGHT
Do your due diligence on property prices in your chosen suburb, so you know what price you need to get the property for – and sell it for – in order to make a decent return on investment. Factor in acquisition and holding costs, renovation costs, resale costs, etc. If the price isn’t right, walk away. There’s no better way to erode or eliminate any chance of profit than paying too much for a property to start with.
5. KNOW YOUR SUBURB
I’ve confined most of my property purchases to a couple of inner Sydney suburbs, so I’ve become a real estate expert in those areas. I know the best and worst streets, where heritage restrictions apply, where high and low price pockets are and what style of home buyers want in my suburbs. This is the kind of intimate understanding of your chosen suburb/s that will give you the edge when you’re on the hunt.
These are just a few of the factors (in a long list of criteria) that come into play when assessing a property for reno. and profit potential. Knowledge is a powerful tool, and you only acquire it through research, experience or formal learning.
ABOUT CHERIE BARBER
Cherie Barber is a public speaker, TV renovator on Network TEN’s ‘The Living Room’ and the owner of Renovating For Profit, a company that teaches everyday people how to buy and renovate properties for profit. See www.renovatingforprofit.com.au
Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.