Date: 25 February 2016
A growing number of people are looking to cash in on a steady property market and low interest rates by buying a house to renovate or redevelop.
But what should an investor consider when looking for the right property? Chris Short from the Association of Building Consultants shares his top tips.
Before signing on the dotted line, go for a walk or drive around the area. To ensure the best return on investment, understand the type of person that will buy the home down the track. Check out how far away the local schools are, where the nearest shopping centre is, and proximity to public transport.
If the property is perched on a sloping block, you can expect to pay a hefty price for footings if you rebuild or extend. Retaining walls can be expensive, so consider the merits of the investment – if it provides picturesque views over natural bush or to the sea, then it might be a worthwhile way to unlock a home’s value.
Compare your target property to those in the street. We’ve all heard the old adage about buying the worst home in the best street, and it’s a great way to get into a sought after suburb at an entry level price.
If you plan to huff, puff and knock the house down, then weigh that up against retaining the house. Renovating can lead to costly repairs to get it to a standard. The demolition option might be a good choice, but maybe not if it is a character home in a character street with yesteryear charm.
Consider access, egress and parking for trades and heavy machinery. Blocking roads can add to costs by having to pay council fees and employing traffic control marshalls – not to mention the relationship damage it might cause with neighbours.
Think about what skilled family and friends are at your disposal. Engaging trusted trades at mate’s rates will keep the costs down.
Research the local development policy, and get to know the council planning team. Identify any encumbrances, and if you plan to go up, then check if you can before starting a project. That is a great way to understand the approved plot ratio, and what private open space commitments you have to achieve.
A full electrical upgrade during a renovation can be costly, and if you plan to install a larger air-conditioner or a new kitchen packed with appliances then the wiring might need an upgrade to handle the extra load. You may need to replace those unsightly overhead wires with underground cabling, and that will add to the cost.
If you want a swimming pool to make the property more attractive, check out if machinery can access the yard to excavate, or whether a crane will be able to lift over the house to put in the pool.
Many old homes have terracotta sewer pipes, and extending a home might prompt a complete replacement to more modern and reliable PVC piping to avoid future plumbing problems, so speak to an expert for some advice.
Remember that a property inspection can happen at any stage of the sales process, and doesn’t have to have a signed contract in place. Having a building inspection done by an experienced building consultant will assist in making an informed purchase decision.