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Doing Up a Dump

Discussion in 'Real Estate' started by Billv, 5th Aug, 2008.

  1. Billv

    Billv Getting there

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    One way to buy in a particular area otherwise out of your affordability range is to find a run-down property no-one else is prepared to love. But how low should you go?

    The common wisdom is that what estate agents describe as a 'renovators delight' usually describes a place you'd be better off knocking down. And it is worth remembering that renovating a dump can be more expensive than demolishing and building from scratch. There's not much satisfaction in spending money on invisible essentials like rewiring or reblocking a house or fixing rising damp or structural problems. Putting in a new bathroom or rebuilding living areas can end up costing more than if you'd bought a renovated property in the first place. Check the prices of renovated versus unrenovated properties in a particular area and you'll notice the difference rarely reflects the amount spent on renovations.

    But if you're not too picky and you're prepared to put up with the discomfort or the aesthetic affront, by buying a daggy dump you can at least buy time. While you may not be able to afford the extra $100,000 on a renovated house now, you may have the money to renovate in three or four years when you've built up some equity in your home.

    Ideally what you want is something that is superficially ugly but liveable. Our first home was a shocker when we first bought it - vile orange and brown patterned floor tiles that clashed with similarly ornate wall tiles, brown wood veneer panelling and the most hideous light fitting imaginable. Even the removalist shrieked when he saw it. But that meant we could afford to buy the house in a suburb closer in than we'd dared to hope for on our meagre budget.

    Another friend bought what looked to everyone else like a renovator's ruin in an otherwise pricey inner suburb. It had asbestos lined brick cladding, awful carpet and a rundown lean-to kitchen, but what she saw were 'good bones' that convinced her it would be worth spending money on it down the track. In the meantime she got the professional asbestos removers in and convinced herself it would be fun to slum it until she could afford to do it up.

    In the end it comes down to personality. Taking on a dump is for adventurers with a high tolerance for discomfort. If you're not the kind of person who can bear living with an outdoor loo and the chaos of renovating you may be better off looking for a nice new or renovated place in the middle or outer suburbs.

    Posted by domain.com.au
    http://blogs.domain.com.au/firsthomebuyers/2008/07/doing_up_a_dump.html
     
  2. Thudd

    Thudd Well-Known Member

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    There's another side to this too.

    My wife & I took on a 'renovators delight' and by the end of it the house had been transformed. It was a nice house to live in. And we did a damn good job too.

    Then not long after we finished the reno circumstances changed and we needed to change areas. During the selling processes almost no buyer cared about the fact that (for example) we'd properly sealed/undercoated/painted one of the rooms into a stunning, durable and better-than-professional finish rather than just slapped a quick coat of colour onto the wall. They didn't care that we'd used quality fittings, or taken the time to do the small touches.

    No, all the buyers cared about was the price. To be sure, price is an important factor. But quality had zero importance, and I'm not just saying that out of emotional attachment. We'd gone above and beyond the call of duty because we'd originally been intending to live there for a long time to come so we'd done the reno for us.

    The corollary was evident during our search for a new property. Owners would (again, for example) typically throw up a quick and dirty coat of paint onto the walls and expect a premium return for their "renovation", whereas we'd see the work that would crop up in six months when the shoddy paintwork would be starting to crack and peel and we'd be faced with a horrendous fixup job. But they'd refuse to bend on their price because "it's been freshly renovated."

    So Thudd's rule of renovation is now: all renovations will be valued equally, so you might as well minimise both expense and effort wherever possible. Karma be damned.
     
  3. Billv

    Billv Getting there

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    Thudd

    I find it strange that buyers were only interested in the price.
    Did you get several valuations and which 1 did you go for?
    Sometimes we overvalue our PPOR because we have an emotional attachment to it.

    It's a difficult 1.
    On the other hand, if you don't sell it and decide to rent it out it will probably get damaged so later on you won't get good money for all the hard work you've done.

    Cheers
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The house two doors up from us sold last year for a new record price in the suburb after having been purchased for the purpose of renovating and on-selling. Sure it looked very pretty - but when we took a close look through the property during an open inspection, we saw so many short cuts - we were not impressed at all with the result.

    I largely agree with you - in my experience, for many people it's all about the "cosmetics" and not about the substance - which is why I would tend to not buy a property myself that has already been renovated!

    But then, I also like classic old sandstone bungalows in Adelaide :D

    Ironically, I've witnessed suburbs which are in the process of gentrification where properties that have NOT been renovated achieve prices just as high as those which have! This is driven largely the DIY set though.
     
  5. Thudd

    Thudd Well-Known Member

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    I think it's because most people are only interested in the surface. "Who cares if the wiring behind the walls is crap or not, if the lights turn on we're happy!" Or, to put it another way, people aren't willing to pay for what they can't directly see. So they see (for example) the deck and say "great, it's got a deck, just like the other 50 houses we've looked at" rather than "Look at that deck! They've used quality timber there, look how it's been taken care of, gee those footings are solid, and that roof, wow, see how it blends into the house, it's not going to look like a lean-to in five years. etc etc"

    So lesson learned, I'm not going be putting in any effort for somebody else's benefit in the future. If they're not willing to pay for a good job, I'm not going to do one for them.
     
  6. Jacque

    Jacque Team InvestEd

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    Sure some renos can be done cheaply, and poor painting (to the untrained eye) can be easy to miss, but, at the end of the day, if the seller or selling agent makes a point of the high quality fittings and workmanship that's gone into the reno, buyers aren't stupid and will see quality for it's true worth.

    When I sold my PPOR last year, we did just this and I could tell the prospective buyers were impressed with our attention to detail WHEN it was pointed out eg: high quality tap mixers, garage fitout shelving, amplimesh screen doors etc It definitely made an impact but you need to sell these features and emphasize the care and fussiness that's gone into the renovations. Having renovated as a HOME OWNER rather than an investor also says a lot about the quality of the work- whether or not it's obvious to buyers.

    On the flip side, as a buyer (for others) it doesn't take much for me to notice shoddy workmanship and the usual suspects of poor quality work or maintenance on a property. A thorough building report also confirms or digs up further surprises that weren't evident upon initial inspection.

    Agree that, if you know you're going to sell, you price your reno to meet the market and not go overboard with the usual touches that you would as an owner, but be careful not to go too far and make it obvious that's it's been a rushed job. Eg: wonky powerpoints, obvious painting marks around light fittings/window frames/skirtings, cheap carpet etc.