tips for working out which suburbs are ripe for renovation opportunities

Hi All,

Newbie question so pls go easy ... Is there a reasonably scientific/process driven way of finding out which suburbs offer better value for creating equity through cosmetic renovations? How do you determine via realestate.com.au or similar where opportunities exist. eg Look at median prices for houses in a suburb and then search for houses 20% under and 10% over the median price? Open to any ideas/suggestions.

Thanks Andy

 

I don't think there is an 'scientific' method of finding a suburb that I know of. When I do cosmetic renovations I generally look for these main things:

1. Suburbs that have obvious price disparity gaps between unrenovated to renovated. (cosmetically, not structurally). A cosmetic reno will never be able to get the profit wanted if it was a structural reno that was really needed. So need to identify ONLY cosmetic renos.
2. Good infurstructe and amenities nearby.
3. Convienence to public transport

Ways that I identify a potential suburb are:

1. Usually stick to middle ring/some outer ring areas. Inner ring areas tend to need structural renos to make the profit more worthwhile imo.
2. Choose a suburb that has good amenties, infurstructure, transport.
3. Through REA and the like, do some quick DD to see what unrenovated and then renovated stock sells for. MOST important thing here is to make sure as much as possible you comparing apples with apples.
4. If you identify that there is a decent price disparity gap, then hone in on what stock in the area offers the best chance to do a cosmetic reno to get your return.
5. Then there is the feasibility.

No easy way I'm afraid. Losts of research and due diligence. When you identify an area and after you know what you need to look for in a dwelling, you can ring agents to tell them your after this type of property.

That's basically the way I know.

Good luck

 

If you are going to reno and flip you really need to time the market well and know your numbers.

 

I have also found starting out buying villas, townhouse, units that need renovation work are perfect because you can quite easily see comparables in the same block that are renovated or not, what they sell for and rent for.

 

you want to find a suburb where you can find evidence of of unrenovated properties vs renovated properties selling for a difference of +33% so you can stick to a budget

Buy Price $0
Buy costs 5%
Loan Costs (for 6 months) 4%
Reno Costs 10%
Profit 10%
Sell costs (As a % of Buy price) 4%

if you can use this formula as a guide it can help as you can see you have your buy price then all your costs add up to 33% for the buy price and that will give you a sell price , but you need to know you can buy a unrenovated house then spend all the costs and sell for the amount or more for it to work and only DD will disclose this

best of luck