30 May Renovate or Walk Away?
When to walk away from renovations and find a better fixer-upper
Renovations for profit are very popular right now, but if you don’t pick the right property, you can be in a whole heap of trouble.
It always looks so easy on TV, but if you pick a property with lots of problems, you can spend all of your potential profits on the renovations and might even lose money on the venture as well.
If you are not a seasoned renovator, here are 5 problems that should ring alarm bells, telling you to walk away and look for a better property to renovate for profit.
- Poor location: We all know that location is a prime factor when buying or selling homes, so for a renovation property, you want the best possible location. Features such as being close to schools, shops or public transport are positives, as are being up high on a hill, a northerly aspect and having lots of natural light. You cannot change the location, so be sure that there are more positives than negatives or walk away and find another property.
- Wall or ceiling cracks: A few fine cracks in the walls or ceilings are most probably due to settling, but if you can fit a $2 coin in the cracks or even more, then these are renovations you need to cross off your list. Large, wide cracks can mean structural problems, so the property is definitely outside the rage of a fixer-upper.
- Extensive damp: A small area of damp might just indicate ventilation problems, which can be easily fixed, particularly in the bathroom. However, extensive areas of black mould (which can be on the walls, ceilings, floors, skirting or cornices) can mean big problems with your renovations, because moisture entering the property can cost a fortune to fix.
- Unapproved additions: If the property has previous renovations that did not have council approval (and required it), then you are buying a bundle of trouble. You can retrospectively apply for approval, but if it is refused you can be forced to tear down these additions, costing you even more money.
- Poor floor plan: Each property will be different, but if you need to change the majority of the floor plan to let in more light and create an open plan layout, then this can take up a large part of your budget. Removing structural walls and installing beams takes time and money, so be sure that there is enough profit in the property if you want to take this path.
Thanks Milliondollarmakeovers for some great advice!