What are your top five reno deal breakers and how do you ensure you avoid them? Our Renovations Expert, Cherie Barber, shares her advice!
The only real deal breakers in my book are the ones that rule out any reasonable profit on a renovation. Inexperienced renovators will baulk at things like asbestos and rising damp, but they are the very “turn-offs” that often secure you a bargain buy.
The trick is to understand exactly what you’re dealing with, what the costs of rectifying the problem will be and then build that into your renovation costs. If you calculate you can still make a decent profit at the end, then even the worst problems are not deal breakers – they’re just costs to factor into your return on investment. It’s the problems you can’t do anything about that you need to walk away from.
Here are five that I would definitely avoid as a professional renovator:
1. Buying on a main road – the noise, fumes and traffic will always be a major “buyer objection”.
2. Buying near high-voltage power lines – people associate this with cancer risks.
3. Buying in a suburb where there is little price disparity between renovated and unrenovated properties – there’s too little margin for profit if you renovate.
4. For a structural renovation, finding that the council’s FSR (floor to space ratio) or boundary setbacks (how far you can build to the boundary) are too restrictive. It will limit potential to increase the floor space or extend the footprint of the property – for example, adding an extension at the back of your house.
5. For a cosmetic renovation (ie, where no structural changes are permitted), finding insurmountable issues that can’t be fixed with a coat of paint or a contemporary facelift. For example, a bleak basement unit with virtually no natural light or a property with no off-street parking (and no potential to create any) in a high-density area where parking is a nightmare.
There will always be obstacles no renovation can overcome – and they will still be there when you sell the property. The trick to successful renovating is to make sure the end result appeals to the majority of buyers. It doesn’t matter how beautifully you renovate a property located right beside an eight-lane motorway, it will never appeal to the majority of buyers and that will be reflected in the price you get.
Buy in a location with broad appeal, choose a property with plenty of scope for improvement, get an accurate price of what those improvements will cost and the price you need to sell at to make a decent return on your overall investment. If the numbers don’t stack up – that’s a deal breaker! Walk away.