Renovating your home can be a wonderful way to build your equity and make a return on your investment, as well as an opportunity to transform your house into your dream home. But it’s also a huge commitment, involving a lot of time, effort, money and patience. In order to make sure you don’t get in over your head, we want you to understand all the factors to consider before buying a ‘fixer upper.’
Find a great cash out rate in seconds.
A big pro in buying a fixer-upper is that it lets you do a bit of work yourself. This can be great if you're handy, but don't let your ego steer the way with this one. Evaluate your true skill level and what you can and cannot do. For instance, start a list of what you are confident in doing, what you must by law have a trade to do, and what you will need some assistance with. This will allow you to plan out your budget and allot time for renovation. Sometimes the DIY aspect of a property can feel like a con if it becomes overwhelming or too costly to employ a professional.
Before you put your house under the hammer, find out about some of the how to make a return on your home improvements.
See how much cash you could access from your property.
Are you going to continue living in the house you’re renovating, or are you planning to sell? This could determine how much you want to put in and how much you want your taste to influence the design choices. If you're planning to stay, buying a fixer-upper lets you design the look of your home without having to build a house from scratch. Always wanted bright pink kitchen bench tops? Well have at it. Of course, you may change your mind about what you want in a year, in which case renovating might not have been the best course of action, as now you only have yourself to blame.
Are you planning on selling after renovating? In this case you get to try to turn a profit through your reno. But this big adventure can go sideways if you put too much of your own style into the house. Just because you love those bench tops doesn't mean your buyers will.
Remember if you're planning on living in the house while you renovate it, this can be a big strain, especially when renovating the bathroom. And no one enjoys being woken up at 7 am by tradies.
Thinking of renovating? Find a great cash out rate in minutes.
Find out if you can save with a lower interest rate.
A realistic budget throughout your renovation is imperative. Budget well and you can turn a profit, a huge pro in the case of buying a fixer-upper. However, it is possible to over-spend and finish your renovation at a loss, a huge con. When coming up with a budget always leave at least a 10% buffer, though 20% is more ideal. This extra cash could really save you.
Lendi makes it simpler than ever to finance your renovation.
A way to save time is to hire a professional crew, but a way to save money is to do it yourself. Managing your time can be a real challenge when approaching a fixer-upper.
Low on time? Get a home loan comparison rate in 30 seconds.
Don't pay more than you need to.
Any renovation should add value to your home. If your property increases in value your equity will also grow. This can lower your Loan to Value ratio (LVR) and strengthen your position if you refinance in the future.
Make sure you avoid overcapitalising when renovating. This occurs when the funds you spend on upgrading do not increase the property's value to the same degree.
Home buying and renovation, while sometimes overwhelming, can be extremely rewarding. Let Lendi assist you with any questions you may have, to help make your home buying experience successful.
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here.
The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
Get a free online property valuation with local sale and suburb statistics.