First property - renovate or build new?

Discussion in 'Investment Strategy' started by djeu, 8th Jun, 2018.

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  1. djeu

    djeu Member

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    Hi,

    I have just purchased my first property, and I am trying to decide if it is better to renovate or build new? Does anyone have any tips?

    Also we are almost in settlement phase.... any advice or words of wisdom on what to prepare / check / get organised?
     
  2. Trainee

    Trainee Well-Known Member

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    Its settling and your just now deciding whether to demolish? What was the plan?
     
  3. Hung

    Hung Member

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    What you should do depends on what your goal is.

    Generally, if its for investment purposes, you get the best bang for buck by doing a renovation. But again, compare the cost of both options and see what the returns are like.

    If you are close to settlement, then i assume the contract is already unconditional. Ensure your solicitor/conveyancer has everything in check and your finance is ready for settlement. Also do your pre-settlement inspection on the property so that everything is as expected.

    If you posted before you bought, there is so much more I could of advised on you.

    But congratulations on your first buy.
     
  4. djeu

    djeu Member

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    Hi, we are not yet unconditional, we go unconditional in two days. Property is in Fig Tree Pocket in Brisbane.
     
  5. djeu

    djeu Member

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  6. kaibo

    kaibo Well-Known Member

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    IP or Owner occupied? IP do the minimum to bring up to rentable condition as be prepared for your place to be destroyed. Owner occupied depends on how you want to live and how much money you have to spend on that lifestyle

    To be honest you should have done this analysis before putting a offer/bid in
     
  7. David Shih

    David Shih Mortgage Broker Business Member

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    As per other contributors stated above, what is your intention with this property? Are you going to be moving in to live or renting it out?

    If it's your future home then I guess it's up to you (and your family) on how you want the home to be. The house does seem to be decent condition and have solid bones though so personally I would renovate instead of detonate.

    If it's gonna be an IP then get some opinion from PM to see what type of demographic you'll be attracting with this property, and then consider options on what will make it more attractive to the target demographic. For example if an IP doesn't have gates between the house and side fence , and you'll be attracting family with small kids then might want to consider put in side gates for security/safety of the kids while they play in the backyard.

    Cheers,
    David
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    It's lovely - I'd just reno the kitchen and bathroom if necessary to get hte best rent. I can see no need to knock that down, unless it's way worse in the photos than in real life. If you were to knock it down, you'd want to be able to build something for additional cashflow -can you put more than one property on the land?

    If you were to knock it down, you won't want to have paid much more than land value or you'll be behind hte 8-ball from day one.
     
    Foxy Moron and wylie like this.
  9. Sackie

    Sackie Well-Known Member

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    I'd never knock down and rebuild just for rental yeild . Has to have at least a 20% return (increase in valuation) on development costs otherwise imo you're not getting good remuneration for the risks taken .

    Imo once you start looking at building anything, risk to return needs to be the most important consideration.

    However if you do a proper feaso which shows say 25-30% gross return on building a high end place for example, I'd be knocking that sucker down tomrrow .
     
    Last edited: 21st Jun, 2018
  10. K8F

    K8F Well-Known Member

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    Is there a way you could add a 4th bedroom ? Or an ensuite? Both would add value and increase the rent.’
    That’s what I’d be thinking bout doing if you can, hard to know without seeing a floor plan.

    If not, just some cosmetic work in kitchen would also be good. Those upper shelves are useless and would be better off with extra cupboards.
    If the lower cupboards are in good nick you could paint them and just put a new bench top on.

    Surely if you rebuilt on that land now you would be overcapitalising considering the purchase price plus demo& building costs..
    I don’t know the area though or the zoning.

    As someone else said, if you were knocking it down I’d want to be putting two on there..

    I’m definitely not experienced as you can tell. But am also looking to buy somewhere that I can add value to by renovating.
     
  11. djeu

    djeu Member

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    Hi all thanks for your advise we are looking at renovating now, getting lots of quotes. Looking at changing floor plan so front door is at the front of the house and adding a 4th bedroom and a second bathroom.