Renovations before settlement?

How comfortable are you guys with renovating before settlement? I have been given access (nothing is on the contract, but I got given the keys and a "you can do what you want once it's unconditional).

My newest is unconditional, finance all approved - should be fine.

I've done lots of hard yakka myself, with minimal financial cost, and I didn't mind the exercise. AN electrician has already done his bit.

But - I'm about to pay a painter and roof restorer... to the order of maybe 6k total, all pre-settlement.

Would you? It lets me advertise and get in a tenant from day dot, but it's a small risk...

 

Personally I wouldn't because I don't think it worth the risk.

For example, if it takes 3 weeks to do the reno.
Loss Rent = $500 x 3 = $1,500
Reno Cost = $20,000.

For me it just doesn't add up.

I normally ask for access to visually inspect / measure up.
This allows me to plan the reno, get tradies in quote and have them ready to go the day after settlement.

 

If you are happy to assume the risk, go for it. I have seen sellers die before settlement however or there is a risk of a bankruptcy event before settlement. Unconditional is never quite unconditional.

 

Yes there is no guarantee that the contract will ever complete.

 

I have, but I had to sign a licence to occupy which stated what I was and wasnt allowed to do.

we painted ourselves, so there wasnt a great loss if it fell through. We also cleaned and got rid of mountains of rubbish.

I was putting in a new kitchen, which was measured and ordered prior to settlement, however the old one wasnt pulled out until after settlement.

Essentially got everything ready, tradies quoted, all the running around etc prior and then blitzed it after settlement.

 

You guys aren't really telling me what I wanted to hear (but that's why I posted - I was running with it until I pulled myself up today).

 

Do lenders ever want to perform a second valuation prior to settlement? For example if it were a long settlement?

If so then probably a bad idea as they may come in mid walls being knocked down and you have to find the shortfall of the new unfortunate Val.

 

Valuations have an 'expiry' period - which may be about 3 months. After this a new one may be needed.

I had one loan client who removed the kitchen before settlement, and before the valuation. The valuer went in and seen it had no kitchen so made comments on the report and the lender refused to lend. Client had another kitchen ready to go in but he couldn't gain access! He nearly lost his 10%, but it got through in the end somehow.

 

So the risk is that anything can happen before settlement, and the property might not be yours. Or you loose all the money you put into the reno. Is this correct, thus the precaution?

 

Have tired this before but was denied. I would do it for painting I think it's fairly low risk

 

Everything I'm doing is an immediate improvement. Nothing structural.
Garden clear out
Old stuff removed
Paint applied
New grouts
New/washed curtains
Roof restore + paint
Exterior paint

 

I did the same thing with the first house I ever purchased. Had to accept the place "as is" to do so, and then found out the air con needed a new motor and the oven was stuffed. But if youre already unconditional then theres little risk.

 

I have done this before. Got permission to paint and do floor coverings. I did that, along with a full kitchen and bathroom reno. Rented straight away. Highly recommend.

 

Sam thing happened to someone that I know recently.

 

Would a caveat protect you?

 

I would be happy to do some basic clean, tidy, paint however I would not commence any demo/major work until settlement for the reasons outlined by others.

 

It would help (Black v Grnock), but not protect you. If the vendor dies the transfer may not be able to complete for example. Similar with bankruptcy.

There would be an argument under the laws of equity that the improvements belong to the person who did them, but this would be an expensive argument.

 

I'm now only 2 weeks til settlement, and both major trades cannot start before next week, with both doing a weeks work. Thus there should only be a week in it, and therefore not worth the gamble, albeit low risk.
The PM is very firm that given the type of property and a fairly limited market, that we get it perfect before advertising, and I have to agree.

 

I painted before settlement and only requirement was that I take out my own building insurance and I had to provide a copy of this to the REA before I got the keys.

 

I have always done it, but only cheap cosmetics that are time consuming like painting, it is only another calculated risk.

PS unconditional or not is still a small risk, for instance, if you did major renos the vendor could also decide not to complete, if vendors solicitor is doing a reasonable job they would already advise against any major renos.