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If you’ve purchased a property with the intention of renovating for profit, then selling it half-renovated would definitely not be ideal.

However, sometimes unanticipated situations pop up which may affect your plans. Circumstances such as job loss, an interstate job offer, divorce or a new baby can bring renovations to a halt if you need to sell the property.

Selling a half-renovated property can be risky for a number of reasons. Firstly, many of the buyers you are trying to appeal to won’t be interested in a half-renovated house and those who are may only end up offering a price that is less than what you paid for the property.

Be realistic about the price

ll of the research and number crunching on how much you could potentially make from your renovated property is irrelevant if you do not finish the project. Buyers who are interested in the property may use the unfinished renovations to their advantage to negotiate the price down. Therefore, you need to be prepared for the worst case scenario to ensure selling the property in the current market is a viable option. You may find that holding onto the property for a little longer and selling a few months down the track could give you a better result.

Don’t leave important features unfinished

There are certain areas in the house that may not have as big an impact on the price compared to other areas. For example, an unfinished spare bedroom may not affect the purchase price as much as an unfinished kitchen, similarly an incomplete backyard is not as bad as an incomplete front yard. If you do have a main area that you have not completed, it may be wise to try and tidy it up as much as possible to minimise the damage it will have on the price tag.

Find money to finish the renovation

If you are serious about selling the property for a profit or even break even, you will need to consider finishing the renovation. This may mean that you will need to find more money. However, try to steer clear of using credit cards and personal loans as these often have high interest rates and will put you in debt even further. Depending on your circumstances, you could consider taking on a second job to fund the project or you could sell something else you own, such as your car or furniture. You may also have a family member or friend who would be willing to loan you the money

Switch to a cheaper option

In order to finish the renovation, you may have to budget. This means switching the brands of paints, door handles, kitchen appliances etc to a more economical option. But remember, if you have to use low-cost supplies choose items that can easily be changed or upgraded later, eg cheap tiles will be very hard to replace and the major cost is in the labour, not the tiles. Try not to make the property look cheap as this could also hurt the purchase price.

Increasing your mortgage to complete the property

Lenders typically steer away from lending against half-finished homes. If you are borrowing upfront to fund the renovation make sure that you do your homework and borrow sufficient funds to complete the project. Always allow for a buffer to pay for the unexpected things that might crop up.

Purchasing a partially completed home could also be an issue. The lender would need to be comfortable with using it as a security and the purchaser would have to show that they have the funds to complete the project. This may limit the number of buyers who are able to purchase, if they are relying on a lender to fund it. Lenders may restrict lending to 80% of the purchase price or less, and place other limitations on what they will approve. This may mean that you may struggle to find a buyer or the selling period could draw out.

If you are part way through a renovation and want to increase your mortgage to pay for it, you could also run into issues. Depending on the state of the home, the lender may be unwilling to increase what you already owe. Refinancing to another lender may not be an option either as they may not want to use the property as security for the loan.

It is not ideal to have to sell a partially completed property. Before starting, make sure you do your homework and you have the funds that you need. Try to keep the renovation timeframe as short as possible so that it lessens the chance of having to sell part way through.