If You Have the Cash…
One angle that could be very good for a person who can get a no deposit home loan, and who has the cash, is to purchase a ‘reno’ property. Properties that are ripe for purchasing with this purpose in mind are usually situated in the middle ring of a capital city.
If you look at purchasing a property that has been neglected over the last 18 months and can get it at a ‘bargain’ price, you could spend $20,000 on a renovation job and probably end up with $30,000 extra value in the property.
At a time such as this, when tradespeople are needing the work you will probably be able to negotiate not only a good price for your renovation work, but also have someone work extra hours so that the work is done quickly. That way you can have your property being rented in extra quick time. It would be a win win situation all round for you, the tradespeople, the renters and the bank.
“Why the bank?”, you ask! Well they will not have so much at risk will they, because the property will be worth more.
Search carefully, get your building and pest inspections done because you don’t want hidden costs, then plan your renovations and have them all ready to go straight after settlement. If you are going to renovate there may be something in the building and pest report that will help you negotiate the price down to cover the cost of fixing it up, but may not be bad enough to actually stop you from buying anyway.
A True Story
I know of a house that was on the market for over 12 months and vacant all of that time.
It was listed in the $600,000+ bracket. I could not work out why it was not selling but when it did eventually sell the new owner told me that some of the brick walls underneath were unstable and he has got in and taken walls down and put in new supports and extra rooms at the same time. This did not worry him because he wanted the extra rooms for a large family, but it would be my guess that the unstable walls were the reason that it had not sold during the 12+ months. There had been 2 contract crashes that I knew of.
Filed Under: Property Investment Tips • Renovations
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