Every week I see properties sell in original condition or in need of a cosmetic or sometimes even major structural renovation.
I never cease to be amazed at some of the actual sales prices on these particular properties.
In some cases, the un-renovated or original condition properties are selling for more money than the fully renovated properties right next door. I know some people want to put their “own stamp” on a property – but at what cost?
Reality TV renovation shows and selling agent advertising hype of “value-adding opportunity”, “bring your paintbrush”, “renovate and profit” etc is somewhat responsible for driving DIY home renovators and investors into searching for original properties. This can be a valid strategy if the property is purchased for the ‘right money’. But you need to value your own labour, holding costs (mortgage interest & no rental income), and transaction costs into the equation. Once you work out the numbers, and the inevitable cost overruns when dealing with the unexpected, the whole exercise can be a worthless from a financial perspective.
It is critical to stick to a game plan and look at the true mathematics behind the project to maximize the return on outlay. Who wants to spend $80,000 on a reno only to have their property revalued at only $80,000 more than it was at the start?
A professional Buyers Agent can help in this situation by doing the correct feasibility on a property on a case by case basis. Buyers Agents will avoid properties with major structural issues than can be a money pit. They will also have a trusted team of professionals they work with including pest & building inspectors to report on a property’s condition before they attempt to buy it. This goes a long way to helping mitigate risk in the planned renovation.