Buying interstate a property that needs significant renovation

Hi everyone

My partner and I are looking for a house in Melbourne and as our first investment property. Although we would prefer buying an already renovated or tenant ready property with potential for future renovation, we have come across some properties with good potential but however they require a more comprehensive renovation (Complete new kitchen and bathroom including tiles and potentially breaking walls and additional tumbling / wiring).


My partner and I live in Sydney and we don’t have any experience with this type of project. We rented most of our lives so any issue was being addressed by the landlord.


How would you line up builders and project managers before buying a property? Melbourne market is still hot, we wouldn’t have the time to ask builders to go on site and do a quote before we make any offer. Also, we are not very well connected (yet) in Melbourne.


We do have a BA, but it seems a project like this is out of their scope, which is understandable, as this can be very long project.


Has anyone done a project like this remotely? How would you suggest me to start?


thank you all in advance

 

Either BA or PM may be able to assist with quotes. Where abouts are you buying?

 

Use a BA or PM who have a project management service.

We've done plenty of renovations for ourselves and our clients of various scopes.

 

Hi @craigc , it is in Melbourne < 15km from CBD either North or West (I haven't bought it yet, but these are the areas I am looking for)

 

Hi @D.T. we haven't bought yet, so we don't have a property manager. I think I am in a bit of chicken - egg situation, and it is a bit hard to trust a 30-40k renovation to a person that I don't know it yet. Also my concern is buying a property and afterwards trying to find a good team (builders, plumbers, etc) that is available in the timeframe I need.

 

Hard to imagine there would be enough fat in a deal to do a renovation remotely and come out ahead. It's not just the cost it is the time factor too, don't underestimate this. When you start talking kitchens / bathrooms it can take a while.

30-40k renovation is a big reno. Don't forget when you start ripping things out other problems become apparent and need to be fixed too. You need good market knowledge and experience to come out ahead on these deals.

 

Thank you for your wise words @Biz. You are absolutely right. I will keep it simple and try do find a property that suits a newbie first, and level up when I am more confident about it.

 

No worries, keep doing your figures. There's always deals out there to be done that require no or minimal work. Renos are ok but you need to have a good eye for them to come out ahead imo.

 

Look for a near new house if not looking to do the reno, or buy a knock down job.

Frankly, in warm/hot markets, seems many people start paying good $$$ for all the junk & people tend to offload the junk when market is like that too.

 

I think my biggest concert is not having enough time to find a good builder / project manager and having to hire whoever is available and being double crossed regarding quotes and scope.

 

That happens even when you have time, or even minor repairs......or even if the place is local.

Decades ago the big trick was telling LL the tenant is not paying for whatever reason, as the agent went off to the pub etc....now they have to be a little more creative.

A decent PM will have decent trades and contacts, so that is the trick. I think it involves some time onsite and talking to people too.

If you knock down, or have land, project builders manage it all under contract that lenders will accept, or buying near new will have most large problems probably ironed out.

 

Sorry can't help with contacts in those areas, good luck with your search.

 

I conducted an interstate Reno (from Melbourne) earlier this year. It's true what they say!! Double the cost and time you've budgeted for! I've renovated quite a bit in Melbourne and doing so interstate was a nightmare. I've decided that if I were to do it again in future I'd only use a tradie from a big company like Bunnings or Ikea kitchen instulation. There's no way I would go with a small tradie again. It's too hard to pick some one reliable without having on the ground contacts. Good luck with your propery purchase! I have a few Melbourne based tradies I've found to be reliable - feel free to pm me in future if you need any recommendations!

 

@Aireys totally understand what you are talking about. @Kate be careful. I would say have a builder lined up before buying. How can you buy a property if you don`t know how much you are going to spend on reno? Also depends how much freak control you are. I am doing one in Brisbane and I am based in Melbourne and ended up spending heaps of money on travels. Was better to pay someone local to project manage the job.

 

Thanks @Luca and @Aireys, I am totally a freak control, but being in Sydney would need someone to project manage the reno for me. I also need to understand what kind of services I could have done via ikea and bunnings. I haven't narrow down the property yet, but after reading all the answers you provided, I will stick to the idea of buying a tenant ready property, perhaps changing carpets that is all. I will pm you @Aireys if need some help with tradies. Thanks in advance!

 

Good idea, why add another layer of risk in a booming market, just makes it more difficult.

 

Buy something that is liveable and get it tenanted as soon as possible (or already tenanted is better). That will buy you some time to plan the renovations that you want to do, and schedule the necessary trades. It's amazing the conditions some people will accept if the rent is low enough. That's not being 'slumdog millionaire' or anything, it's just that some people are more than happy to take crappy but functional if the price is right. Once you have everything planned for the renovation, it should be quicker and you can increase the rent for the next tenant. If your strategy is to sell in the short to medium term, it might be better to wait to complete the renovation when its closer to sale time and then sell immediately after the renovation is done, rather than renovate straight away and have the improvements be well use by the time you come to sell.

 

A 30-40k reno isn't much and not too hard to manage remotely. I spent 40k managing a reno in Melbourne from Thailand using Whatsapp and increased the rent from 420pw to 650pw. That's a 30% return and the whole thing took 3 months. Easy money. Just be smart and know your demographics.

 

Hi @nambis. If Investment Property is 'my business' - I need to interview the candidates and see what they have done in the past (previous customers referrals) , align builders time availability with the purchase of the property. If I am renovating a kitchen and suddenly the builder says ' there is water damage in your flooring, you need to re-stump - redo the floor, etc' - how do you know the person is being honest with you if:
1- You haven't worked with them before
2 - You don't understand anything about building / construction / renovation
3 - You can not judge if something that the builder said you need to do is actually true or the person is just trying to increase the scope of the work ?

 

Ideally you have some background or experience in building/construction to mitigate your 3 points but if you don't then hopefully you've chosen a handyman/builder who is tech savvy enough to operate a chat app like Whatsapp, Viber, Line etc so they can send you pics/vids of the problem so you can direct them appropriately. Hard to answer without knowing your background or if you have much reno experience.