Time and time again, we are asked how to choose the right house to renovate, and while there is no set formula, we do have a list of things we do each time, to ensure we get it right. Quite simply, it’s all about the research, there is no get rich quick way in renovating, especially in Australia where building costs are as high as the tax we pay. That said, if you are looking to climb the property ladder, renovating and selling is a great way to do so.
How To Choose The Right House To Renovate
Why Are Your Renovating?
The very first question you will need to honestly answer to yourself will be, why are you renovating? There are 2 simple answers to this question, you are renovating to sell, or renovating to live. Each answer gives different weight to your answer for how to choose the right house to renovate. Renovating to sell changes the sum, which we will outline soon, renovating to keep, means you need to buy both with your head and your heart, as this is about to become your family home.
The researching should begin long before you purchase a home. If you are renovating to sell, you will need to have a firm understanding of the current market and be working with a well-respected agent to ensure you have an idea of where the market is heading in the short term. House prices can change rapidly, however a well-seasoned agent can see the change before it happens and will be happy to share their knowledge.
You will need to have an idea of what you would like to have in your finished project, and then understand what the value of that is. For example, you may wish to ensure your finished home, will have 3 bedrooms, 2 bathrooms and a deck. If that is the case, you need to know how much your finished project will sell for, before you buy!
This will help you determine how much you wish to spend on the raw product.
This same research will have you understanding what a bargain is, and what is overpriced. The easiest way to determine this is by attending every open home in your area for all ends of the market for at least a few months before buying your home. Make notes on what you think, for example;
24 Hume St, Somewhere, 3 bed, 2 bath, renovated no car accommodation. Listed $359K sold $325K 30 days on the market. Then go on to have a summary on your opinion of the home.
Overtime you will correlate quite a collection and this will be your insight into the market.
Know Who Is Going To Buy The Finished Product
While researching, be sure to understand who is buying in your chosen area. You need to have a great understanding on who is buying your home, before you determine what you will undertake in the renovation. A first home buyer has very different needs to a family, or empty nesters, be sure your renovation will hit all your buyer’s needs.
Construction costs will vary and are hard to predict until you have renovated at least several times, however understanding the construction costs is an important as understanding the market. If this is your first-time renovating, we recommend hiring a professional to walk through your ideas PRIOR to making an offer on a house.
We have a Building and interior consultation that can be tailored to give you ball park figures for specific jobs you wish to undertake. The small investment made before you buy the house will give you a full idea of what construction costs to anticipate before you put in an offer. This will allow you to get the full picture and avoid purchasing a costly mistake.
There are a few sure-fire ways to ensure you maximize the profit potential in your renovation. When well built and situated thoughtfully, decks always add value, likewise adding bedrooms, and bathrooms, but don’t add more than the norm for your area. Living areas do not always add value, but a spruce up of existing areas will.
Kitchens and bathrooms sell homes, but don’t need to be the latest and greatest, be cautious not to over capitalise in these areas. Work with your builder to find the most cost effective ways to complete your renovation while maximizing your profit potential.
Make Sure The Sums Line Up
At the end of the day, the best way to know how to choose the right house to renovate, is to be sure the sums line up and you will have sufficient profit to have made the exercise worthwhile. If your are well informed of the above, the choice should be clear.
Renovating for profit can be a fantastic way to increase your earning potential, but it will be hard work, and it will be stressful, however with research and tenacity it can also be enjoyable.
Have you renovated a home to sell? Got any tips you’d like to share?