Conveyancing Lessons for Buying a Home Earmarked for Renovations
The idea of buying a renovator’s dream can be tempting, but purchasing a property earmarked for renovation is fraught with difficulties. Prospective buyers should make sure they are well informed and ready for the time, energy and money it takes to buy, renovate and re-sell a property.
If on the other hand, you intend to purchase and renovate a property for yourself, you need to think about whether you will live in the property while renovating or live somewhere else. Either way, you will have the inconvenience of half-finished rooms, dust, and paint fumes, or the stress of a mortgage and rental payments.
Renovation is not for the faint-hearted, but taking the five following points into account will help you make an informed decision and capitalise on the time and money you have invested in the property.
Check the contract and any planning issues
Location, location, location
Avoid major structural renovations
Stay in Budget
Plans, permits, Home Warranties – what you should know
Before you get carried away with plans and sign on the dotted line obtain legal advice and, make sure there are no limitations attached to the property. Check for easements on the contract and make sure there are no protections on older properties. Ensure that you have done your sums on the FSR (Floor Space Ratio) and checked setbacks and height requirements for the block. Another thing that can cause plenty of headaches and expense are sewers. Make sure you study the drainage plan provided in the contract and avoid building over a sewer.
Yes, it is an old chestnut that still has plenty of truth – buy the worst house on the best street. If you are lucky enough to find a tired home in need of a facelift in an up-and-coming suburb, you are sure to make a return on carefully planned renovations. Choose a property that has the potential for modernisation but does not require expensive works and you will reap the rewards sooner rather than later.
Continuing from the point above try to stick with properties with “good bones” that only need cosmetic work. Structural damage repairs often uncover unexpected problems which make them both costly and time-consuming. Look for cracked walls, dummy plasters, uneven floors and door frames that are not sitting square. Get an inspection for plumbing, wiring and pest activity, and double-check for the presence of asbestos.
Whether you are renovating to make money on an investment property or to create your “dream home”, you need to work out a budget estimate, and you need to stick to it as closely as possible. If you are unable to do the job for yourself, get fixed price contracts to protect you from ballooning costs from “unexpected issues”.
It doesn’t matter whether you are staying or selling, renovations are all about increasing the value of your property. Choose materials and inclusions wisely. There is no point spending thousands on a little-known timber from a distant land to finish the interior of your bedroom closet if no one else can see the value. Think about the best materials to use for each job, and target the areas of the home where renovation will make a maximum impact for minimum dollars. With most older properties, renovating kitchens, bathrooms, and outdoor living areas usually adds real value.
Last but certainly not least, is the paperwork required to undertake major renovations. There are permits and plans to lodge, pre-construction contracts and more. It is a good idea to understand your obligations and the paperwork you should keep before beginning a renovation to avoid confusion or problems on-selling at a later date. As well as meeting contractual obligations, your registered builder or contractor should supply a Home Warranty for any work on a domestic property over $16,000 (please check with your State authority on the exact fee). If you do the job yourself, you still have to supply a Home Warranty if the cost is greater than $16,000.
If you are unsure of your obligations, contacting MyPlace Conveyancing is a good place to start. Getting expert advice before you begin could save you time and money down the line.
Home renovations are a wonderful way to get the home you have always wanted without having to move, or they can be equally effective at making you an excellent return on investment. Nevertheless, renovating carries risks, so as always, it is buyer beware.