Hi I am considering buying a unit to live in and renovate (doing most of the work myself) – then selling off for a profit after about 6 – 12 months. I would anticipate making changes to the kitchen and small changes to the bathroom – then fixtures and fittings and a paint job. hoping to do this in under $10k. by it being my first place of residence I would be entitled to first owners grant and once I sell it I wont be subject to any capital gains… what are your thoughts on this? I need some advice please.
Hi Gman,
It all depends on what you buy as to how much you will make. Get out and see as many as you can. Check the body corp fees , this will affect your comfort in holding and the resale. High potential rent will boost sale price too, so if owner occupied ask agent for rent appraisal from their PM. Most sales agents have no idea on rentals so ask for something from PM in writing.
Be wary of buying too old especially if a lot of new ones are being built or are planned to start soon.
I find units in smaller complexes sell better unless you have a view. Consider transport, parking, storage and security.
One strategy which I find interesting is to look for a complex where there is a decent amount in the sinking fund. Then get actively involved in getting the other owners on board with spending on improvements and maintenance. This will boost the value without costing.
Look for something with good bones and without any major problems. Cosmetic rejuvenation while living in the property is an excellent idea for tax reasons. It is sometimes possible to cover bench tops and put new fronts on kitchens, much cheaper than replacing the lot. Auctions have good vanities and showers much cheaper than plumbing suppliers.
I saw a townhouse today which has 2 courtyards of overgrown garden and mouldy block walls. Inside is already renovated. About $500 and a bit of sweat over a few weekends and it would be a different place.
I hope this helps.
All the best,
Jeffno reason why you cant make this work if you buy wisely, prices hold and you can control your buying and selling expenses. To be sure of your selling position in 6-12 months you need to buy in a desirable area and/or have something with a distinct selling point.
we recently did something similar……..stumbled on a truely grotty unit in a good block (well maintained , no structural problems, nice gardens), have done a basic clean up and superficial renovate to pick up a nice (theoretical) capital gain in 3 months. In our case we are holding and renting it. Selling points for this place are CBD and transport proximity, emerging trendy area proximity and parking 3 metres from the door.
Renovating a place that is also your PPOR is a good way to make money if you choose your property wisely. But before you choose a property decide how much interruption you can put up with. If you are single person and don't mind living on a construction site then it is a great idea but if you have a stay at home spouse and young kids then ask yourself whether they will cope and whether the profit is worth the inconvenience.
Just beware of selling it before owning it for less than 12 months though. Although the ATO does not stipulate how long you have to own a property before it is considered to be your PPOR, they generally accept that 12 months is a reasonable timeframe. If you own it for less than 12 months the ATO can start asking questions. Whether a house is deemed to be a PPOR depends on intention. If you bought it with the intention of renovating it and onselling it then the ATO can deem your property to be an IP even though you don't own another PPOR and you will then lose your CGT exemption. But if you live in it for 12 months that generally satisfies the ATO as to intention.
Cheers
K
Be wary of buying too old especially if a lot of new ones are being built or are planned to start soon.
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