CEO's Message Apr 2019
Category CEO's Message
We've all seen the TV shows on the home channel where someone buys a dilapidated house in a desirable neighbourhood, spends a few weeks pushing out walls, tiling and adding a dash of paint and then hears the ka-ching of a good resale.
But there's far more to getting into the fixer upper market than new furniture and a little elbow grease. You need to make the right investment decision and have a clear idea of exactly what you are taking on and why.
Starting with the why - are you buying to fix and flip to make a quick profit. If so, you need to be on your toes and make sure that you have a home with largely cosmetic problems in a neighbourhood where properties are in demand and sell quickly. If you're looking at creating a dream family home for the long-term on a short budget, then you need to have a plan and a timeframe.
Either way, though, there are some crucial issues that you need to consider:
Location - Research the neighbourhood to see if you are getting a good deal and that the overall amount (property price and renovations) matches the prices that neighbouring homes are fetching. Don't over invest in a masterpiece from which you cannot recover your money.
The reason for selling - Why is the property on the market in the first place. First prize is a couple who is downsizing. These are often homes with dated fittings that can be easily changed to deliver a great contemporary family home. Try to look past obvious flaws like the ugly tiles and peeling paint.
Do your sums - work out how much will be needed to fix it up to make it move in or sale ready. Never take on a fixer upper without a budget and a clear idea of how and where you are spending your money. If you don't have cash on hand, then chat to your bank or bond originator to find out whether you can secure an additional loan to do what's necessary. If you are planning to add on, find out if you need building plans and what fees are applicable.
Get professional advice - make sure that you know about any major issues, especially structural problems, roofing, cracked walls and plumbing. If you have a contractor on board, ask him for input before committing.
Look at the layout - Moving walls is often expensive and requires planning permission, so look for a house with a good basic layout and work from there. Also, consider resale - three to four bedroomed homes are most popular, a home with a pool at the end of a large garden doesn't make for a good entertainment area and bedrooms that are far apart (at opposite ends of the house or on different floors) will not work for buyers with small children.
Sort the cosmetic changes from the big ticket items. Make a list and separate simple things like peeling paint or wallpaper, threadbare carpets, rusty fittings, and broken windows from complete kitchen and bathroom renno's, sagging foundations, leaking pools and replacing window frames.
Look at labour costs - if this is going to be your future family home and you're a DIY guru, then you can consider rolling up your sleeves and saving. If you need to bring in a contractor, shop around for lowest rates and always ask for references.
Author: Tyson Properties