Buying a run-down property to renovate and sell for profit sounds like it should be a sure bet, but get it wrong and you could end up out of pocket.
If it was that easy, we'd all be flipping houses for a living! There are many things to look out for before you buy a property to renovate and sell, but these are arguably the most important:
Do your research
The first step to staying out of the red is doing your research. Before you should even be thinking about a property, you need to be certain of your location.
For example, in the trendy inner west suburb of Balmain in NSW, house prices have risen by 12 per cent over the last year. But, Queensland's Townsville is in negative figures.
Think outside the box
If you fancy tackling a project close to home, but you're in a booming suburb, look in other adjoining areas and alternative suburbs. They could be more affordable and therefore ripe for growth.
Ideally, you should be looking for a property below market value. This is all well and good in theory, but an abnormally low price usually means there could be a major, underlying defect.
If you're not sure, call in the experts to give their opinion.
Calculating real costs
Don’t forget to factor in the cost of buying and potential capital gains tax when you sell.
Stamp duty on a property worth half a million is around $21,000 in Victoria, $18,000 in NSW and $9,000 in Queensland, so add that into your bottom line… it can make all the difference.
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