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When done correctly, renovating a fixer-upper property could help boost the value of the property. But how can you tell a real bargain from a money pit?


When done correctly, renovating a fixer-upper property could help boost the value of the property. But how can you tell a real bargain from a money pit?            

Whether you are renovating for profit or just to improve your own residence, chances are you won’t have an unlimited budget and you want to avoid overcapitalizing where you spend more than is added in value. Finding the perfect renovator's delight will take time and research. So how can you find the perfect property to fix up?

The right location

Just like any property purchase, location plays a big role. Buyer agent and reno guru Patrick Bright suggests targeting shabby properties in suburbs with general upside potential.

But how can you know which area will be best? Focus on a handful of suburbs and become an expert in these areas to get an idea of which would be best to renovate in. Have a look at past sales and rental yields for the past few months and also take into account the population growth and any developments that are planned for the near future. These factors will give you an idea of whether the area is growing or not.

To get you started on your research, check out the free Property Report at State Custodians. It will give you key stats for any suburb you are interested in.

Minimal effort with maximum return

If the property is in a real mess, you may find it difficult to get a lender to accept it as security for a loan. It also means that you are taking on a huge amount of renovating that you may or may not have experience in.

You do not always have to make drastic changes to a property in order to boost its value. It is often the smaller rennovations that can make a huge difference. Cosmetic renovations often give the biggest bang for your buck, so fixing up a well-used area such as the kitchen or bathroom is usually common.

Replacing carpets, painting walls, replacing kitchen and bathroom fixtures and landscaping the garden are not as time consuming and costly as knocking out walls and changing the layout, but can boost the value significantly. Be realistic about what you are going to be able to do and fully cost it. Then check with real estate experts about how much value what you are planning to do will add to ensure it is more than what you are planning to spend.

Avoid hidden costs

Hidden costs can make or break a renovation. Before you purchase a property, your legal adviser will always advise you to get a pre-purchase building inspection. Also investigate if there are any legal or heritage restrictions which could affect your renovation plans.

A pre-purchase building inspection may reveal issues you were unaware of like faulty wiring or plumbing issues which will need to be fixed these before you can re-sell or rent out the property.

The most important thing when looking for a renovator's delight is to keep your emotions out of it and keep thinking strategy. Many renovator's get caught up in the emotion and buy a run-down property without calculating the numbers to ensure it is going to stack up and return a profit.

The other thing to consider is how you are going to fund the renovation. It may be from savings that you hold back from the purchase or you may want to borrow funds for it. If you are thinking of renovating for profit, speak to the Lending Specialists at State Custodians about what you are looking to do. They can help you crunch the numbers and advise you of your lending options. Call now on 13 72 62 to speak to a Lending Specialist or leave your details here for them to contact you.