As we discussed in a previous post [What You Should Know About Buying a Knockdown Rebuild], sometimes finding the best home in the best area is not always feasible, whether it’s due to your budget or just a lack of suitable homes that are on the market.
In this case, you may look for an older home that you can renovate to better suit your needs later. If you decide to go down that route, however, there are things to keep in mind.
Renovation budget
If you haven’t bought yet, you need to factor the cost of renovating into your overall budget, then subtract it out again so you have a final amount you’re able to invest in the property itself. If you overspend, know that it’s eating into your renovation budget.
In setting your renovation budget, you should also set aside about 5-10 percent more to cover any additional costs that may crop up at the time of renovating.
Safety considerations
Many homes built prior to the 1990s will contain asbestos or asbestos-containing structures such as eaves, roofing and wall linings. Likewise, homes built prior to the 1970s may contain lead-based paints.
These need to be removed safely, and so you will also need to factor in the cost of doing to into your renovation project. This is especially important if your intend to renovate your home as an owner-builder.
Council regulations
Renovating requires council approval, which may attract objections from your neighbours, just as it may if you decide to demolish the dwelling and rebuild a new one. But there are also other council regulations you need to be aware of before you make plans to renovate — if you haven’t bought the property yet, you should look into the following before making an offer:
- Estate covenants or body corporate requirements
- Heritage regulations
- Easements that may preclude the use of part of the land
- Zoning regulations.
Renovations look scary!
I thought I would share some images of a renovation I was involved in at a Newcastle investment property. There was major work needed because you could see through to the ground under the house!
New house and land package vs renovation
One reason that many people consider buying a new house and land package is because they can leave all of this work to a professional builder, claim the depreciation and interest expenses to reduce their taxable income and access new and growing areas.
There are lots of things to consider when buying a property, especially if you intend to renovate it. For help finding your new home or investment property in the Newcastle, Cessnock, Port Stephens or Lake Macquarie areas of NSW, let us know what you want or enrol into our property investment training course.