Renovating your home can be a wonderful way to build your equity and make a return on your investment, as well as an opportunity to transform your house into your dream home. But its also a huge commitment, involving a lot of time, effort, money and patience. In order to make sure you dont get in over your head, we want you to understand all the factors to consider before buying a fixer upper.
1. Do-it-yourself vs. hiring professionals
A big pro in buying a fixer-upper is that it lets you do a bit of work yourself. This can be great if you’re handy, but don’t let your ego steer the way with this one. Evaluate your true skill level and what you can and cannot do. For instance, start a list of what you are confident in doing, what you must by law have a trade to do, and what you will need some assistance with. This will allow you to plan out your budget and allot time for renovation. Sometimes the DIY aspect of a property can feel like a con if it becomes overwhelming or too costly to employ a professional.
2. Why am I renovating?
Are you going to continue living in the house youre renovating, or are you planning to sell? This could determine how much you want to put in and how much you want your taste to influence the design choices. If you’re planning to stay, buying a fixer-upper lets you design the look of your home without having to build a house from scratch. Always wanted bright pink kitchen bench tops? Well have at it. Of course, you may change your mind about what you want in a year, in which case renovating might not have been the best course of action, as now you only have yourself to blame.
Are you planning on selling after renovating? In this case you get to try to turn a profit through your reno. But this big adventure can go sideways if you put too much of your own style into the house. Just because you love those bench tops doesn’t mean your buyers will.
Remember if you’re planning on living in the house while you renovate it, this can be a big strain, especially when renovating the bathroom. And no one enjoys being woken up at 7 am by tradies.
3. Set a strict budget
A realistic budget throughout your renovation is imperative. Budget well and you can turn a profit, a huge pro in the case of buying a fixer-upper. However, it is possible to over-spend and finish your renovation at a loss, a huge con. When coming up with a budget always leave at least a 10% buffer, though 20% is more ideal. This extra cash could really save you.
Lendi makes it simpler than ever to finance your renovation.
4. Be realistic in your timing
A way to save time is to hire a professional crew, but a way to save money is to do it yourself. Managing your time can be a real challenge when approaching a fixer-upper.
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5. Grow your equity
Any renovation should add value to your home. If your property increases in value your equity will also grow. This can lower your Loan to Value ratio (LVR) and strengthen your position if you refinance in the future.
Make sure you avoid overcapitalising when renovating. This occurs when the funds you spend on upgrading do not increase the property’s value to the same degree.
Home buying and renovation, while sometimes overwhelming, can be extremely rewarding. Let Lendi assist you with any questions you may have, to help make your home buying experience successful.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.