All those property and renovation shows have a lot to answer for. It is simply not that easy to make money by buying, renovating and selling property. With fairly sluggish market conditions overall, there will always be more tears than dollars in this venture.
Unrenovated properties attract much more competition and therefore command a premium. For instance, seasoned agents will tell you that there is no better headline on a signboard than “deceased estate”. A blank canvas with a bit of history is like candy to a baby for would-be renovators. If unrenovated properties are what you are after, be prepared to compete with every other couple in their late 20′s who have watched too many lifestyle shows. The reality is that there just isn’t that much difference in price between unrenovated and renovated to justify the interest on purely financial grounds.
According to “HIA figures”, renovations do not come cheaply. The average ground floor extension is about $110K, second floor extension about $115K and the average kitchen about $22K. By the time that you engage architects, pay council fees and the inevitable unexpected, outside-of-quote costs, you will likely have been better off buying a renovated property in the first place.
Renovations always take longer than you expect. My wife and I extended our first home in Leichhardt in Sydney’s Inner West. Heartbreakingly, by the time we had finished renovating it was time to move on. We had been living in the house for 3 years, had just had our first child and had simply outgrown it. It was a crying shame that we had slapped the last lick of paint on the place just in time for the For Sale sign to go up. All that blood, sweat, tears and living through months of dust and port-a-loos just so that it can be enjoyed by someone else.
If you have the renovation bug surging through your veins and face the irresistible urge to pick up a hammer and bang something, then, as they say, knock yourself out.
Michael McNamara is the General Manager of Australian Property Monitors, publisher of www.homepriceguide.com.au
Posted by Michael McNamara
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