Updated: May 21, 2018
Making a profit on the sale of your home is a beautiful thing indeed. CoreLogic RP Data shows it’s a rather common occurrence in Australia, revealing that the average profit made on property sales is around $100,000 a pop.
Buying and renovating a home as a ‘fixer-upper’ could be the way to make sure you’re amongst the lucky group who made a profit. Whether you’re planning to live in your new home, or flick it on as an investment, there’s a few things you need to know before you start.
Buy an ugly house in a pretty area
When buying a fixer-upper, the point is to buy a property cheaply in an area that usually costs a bomb. You might be able to pick up a bargain on a home in such an area if it needs considerable work, or appears undesirable for some reason. Buyers agent and renovation guru Patrick Bright offered some advice on doing so successfully in a comment to Domain:
“The inner ring of capital cities is a good place to start, as it’s the most bulletproof part of the market,” he says. “Look for areas with decent infrastructure, but make sure you’re not on top of it. A new rail line is great, but not if you can hear it.”
Don’t overextend your budget
During your purchase and the subsequent renovations, your budget needs to be strict to help you avoid overspending. When working on an old home in need of several alterations and improvements, it’s easy to lose track of the amount you’ve spent and overcapitalise.
To avoid doing so, make sure you understand exactly what needs to be done before you purchase the home, and perhaps even get quotes from tradespeople. That way you’ll be safe in the knowledge that you can afford your home and the required renovations.
Before buying a home (particularly one in need of work) it’s essential that you do your due diligence to check that everything is in order. A pest report is essential as insects, like termites, can cause expensive damage to a property’s structure. The Australian Pest Control Association estimates that this will set you back roughly $250 to $350, depending on the home.
A building report is also essential – this will cost approximately the same and let you know if the property has any expensive results before buying.
If you’re buying a fixer upper, and need help financing your project get in touch with us today. With the right guidance, and suitable finance products, fixing up your new home will be much easier.