Tim McIntyre: Buying A Fixer-Upper
It’s that time of year again, usually just after the Easter Bunny has hopped home and I am counting my losses from the Anzac day Two-up ring, when many Australians feel that what is really missing in their life is a “project”.
Now those of us who like their sanity intact might choose to read a good book, or take up crosswords…some kind of non-offensive hobby.
But then there are the thrill seekers out there, who like to induce rage with pursuits such as origami, building model sailboats, or golf…OK, I get it, people with actual skill and patience can thrive at these things, but they turn me into ‘The Hulk’ (I won’t say incredible, because I don’t look that flash when I tear my shirt off).
But the ultimate undertaking for anyone who wants to test their skill, resolve, financial viability and even marriage, is the property renovation.
This country’s love affair with renovation is as apparent as it’s general obsession with real estate; just look at the number of TV hours dedicated to buying, selling, designing, improving, building, boasting about and getting married in…homes.
The most popular subset of this culture must be the reno reality show.
But it’s important to realise that what happens on these programs is about as far from reality as can be.
On most projects your budget is almost certain to be blown, whether that’s your money budget, your time budget, your stress budget, or all three.
Renovation comes in many different forms, but considering the strong performance of some of the nation’s capital city markets in recent years, one of the most popular projects is buying the old fixer-upper property for a decent price and then setting to work.
When buying run down or damaged homes, you can often get a bargain as other buyers will put them in the too-hard basket; they may not have the time, skill or patience to embark on a tough project.
But if you go down this path, good luck.
First, ensure any damage to the property is only superficial, such as minor burn marks, wear and tear, or overgrown gardens.
If the damage is structural or something more similar lies just beneath the surface (see termites), you could be ruined by hidden costs.
Next, make sure you are meeting the market demand.
If everyone in the suburb is looking for a three-bedroom family house with a decent yard and maybe a swimming pool, there’s no point putting up a one-bedroom villa that doubles as an antique shop.
There must be buyers willing to purchase your finished product; or at least a strong rental market in the suburb so that you can put tenants in place while waiting for selling conditions to improve.
Finally, studies have shown that most first time renovators underestimate the time and costs required by the project, so it’s important to prepare for nasty surprises along the way.
You may need to take extra time off work, get help from friends and family, pay extra contractors, or, if you are an owner-occupier, sort yourself out with a place to stay if the work becomes too intrusive or drags on longer than your welcome at a friend or family member’s place.
Good luck, the rewards are there if the job is done right!
Tim McIntyre is the senior real estate reporter for the Daily Telegraph and news.com.au
Over the past decade, he has attained widespread knowledge of Australia’s many unique property markets and is an authority on all things buying, selling and investing.
His commentary appears every Saturday in the Daily Telegraph Real Estate lift out, as well as online at news.com.au