Buying a 'fixer upper': Six things to check for

New home buyers with smaller deposits often opt for a ‘fixer upper’, a property that needs substantial renovation, to get into the market they are after.

Filled with aspirations of renovating, and hyped up on The Block, it’s not surprising that sometimes the reality of home improvement isn’t at the forefront of every purchaser’s mind.

Here are six things to consider to give yourself a reality check.

Your own skills

First up – have you renovated before, or do you have any renovation experience? If not, are you intending to bring in the experts? It’s time to get honest with yourself about your capabilities.

Some people are more able than others to renovate, it’s just a fact of life. Know your limits, know how much it’s going to cost to bring in some experts, and whether or not you should really be DIY-ing.

In fact, real estate expert Chris Gray’s perspective is to overestimate the costs and time it takes to renovate.

“My tip is to double your expected cost and double the time frame, and then work out if you’re still going to make a profit. Most of the time, it works out more efficient from a time, cost and stress perspective to outsource the renovation to the experts,” explained Gray.

He also suggests being realistic about the DIY. Remember, tradespeople and renovation experts do these tasks for a living. They’re not all as straightforward as you’d imagine and often you get what you pay for.

“I once had a client who wanted me to buy him a property to renovate as a retirement project. When the time came to renovate, my client asked me to outsource big jobs like the kitchen and bathroom, as they’re best done by specialists who would do it in a fraction of the time,” Gray said.

“We then agreed that tiled flooring was best left to an expert and built-in wardrobes left to a different specialist. Five minutes later, the only non-specialist job that he had a hope of completing himself was the painting.”

The ‘unchangeable’ items

If you’re looking to renovate a property, it’s fair enough to overlook garish wallpaper and pink bathrooms. But what you don’t want to overlook are the items you cannot change in the property.

One of these is the neighbourhood. Another may be the busy road to the front, or the overshadowing neighbours to the sides that offer no privacy. Be acutely aware of these limitations and understand that no matter how nicely you update the physical property itself, some of these aspects will ensure a ceiling on potential growth remains.

Floor plan

An aspect to check is the floor plan of the property you’re looking at. This will largely determine whether the shell offers you scope to work with the space as you choose. Ensure you know which walls are load bearing and which can be taken away easily to make a room open plan or to combine two small pokey rooms into one large room.

The floor plan is also worth looking at if you’re only looking at a cosmetic upgrade. If you don’t want to be pulling out walls, ensure the floor plan shows good potential on its own.

Structural integrity

The structural integrity of the property is critical, especially if it is out of your budget to fix up largely hidden items. This could cover plumbing, electrics, termite damage and a whole host of other issues.

These are unlikely to be spends that you will recoup in a re-sale environment, unless you plan carefully and get the property at a discount as a result of the time, effort and cost you need to put in to rectify the issues.

When someone refers to a property with “good bones” this is usually what they are referring to – a property without structural defects and with little that needs to be done to the physical property itself. A building and pest inspection will certainly come in handy at this point.

Local council restrictions

Depending on the extent of renovations, to the point of structural or minor redevelopment, you may want to quickly call the local council. Some councils take longer than others and some are not as open to development.

It is also worth speaking to the neighbours if you intend to do anything major with the home to see if they are likely to fight against your improvements.

You may also want to look online at what has already been approved to check timeframes and what is likely to be allowed on your block.

Are you purchasing for a fair reduction?

Buying a cheaper unrenovated home can be a false economy if renovated properties are available for less than it will cost you to purchase and fix up the lacklustre cheaper option. Ensure you are getting the property for an acceptable discount, otherwise you will face overcapitalising and plenty of wasted time.

Do your back of the envelope sums to work out the cost of your potential renovations.  

What have your experiences with renovating been like?