i saw this house today which was going for 400K …the land price on it was 320K….the house is more than 40 yrs old….would it be a good idea to buy the place and renovate ? Would it increase the price of the house.
A friend told me the expected life of a house is around 50 yrs so if i buy a house which is more than 40yrs old and renovate it then it wouldn’t increase the value as such of the house ..is that true ?Is it the best way to demolish the house and build a new one ? Unfortunately i do not have enough money to do a new one…
so would it be a bad decision to buy the old house and renovate ?
Originally posted by soum:i saw this house today which was going for 400K …the land price on it was 320K….the house is more than 40 yrs old….would it be a good idea to buy the place and renovate ? Would it increase the price of the house.
A friend told me the expected life of a house is around 50 yrs so if i buy a house which is more than 40yrs old and renovate it then it wouldn’t increase the value as such of the house ..is that true ?Is it the best way to demolish the house and build a new one ? Unfortunately i do not have enough money to do a new one…
so would it be a bad decision to buy the old house and renovate ?
Just after being warned by the Reserve Bank that interest rates were going to be increase twice?
At the peak of the largest asset bubble the world has ever seen?
Before you fork out $350’000 do some real research. Think long and hard. That is a real lot of money you will have to pay back. Don’t think that Negative equity is just a bad word. It’ll F#$K up your financial life for quite a bit. This bubble doesn’t need another sob story for Today Tonight.
All I can say is Research, Research and Research. With the uncertainty of the Property Market and interest rates at the moment, who knows what is going to happen. Talk to people and make sure you have an exit strategy with whatever you end up doing. DON’T RUSH INTO ANYTHING.
I have been in the finance industry for 20 years and now run a Finance Help Line for people in real financial difficulty and have seen many people lose everything because of poor financial decisions or just plain bad luck and trust me you don’t want to end up in that situation.
Do the figures and if it doesn’t work don’t risk it. There is always more deals around the corner.
Kerri
Financial Wellbeing Coach
W: http://www.pfsfinance.com.au
E:[email protected]
E:[email protected]Development Finance Specialist
Interesting point, though:
A friend told me the expected life of a house is around 50 yrsI must admit that I have never heard this before. How much fact is in that statement? Does any-one know?
I’d have thought that it would be a case-by-case basis. Our PPOR is 25yrs old and I’d hate to think it will only be viable for another 25 or so years (maybe a cyclone will sort all that out for me – get the insurance and rebuild! Dreams…).
Any-one?
Cheers
C@34
well it is the “expected” life i guess….but as you said it should be case-by-case basis….but taking depreciation into effect a 50+ yr old house would only have a 50K value at the current time(provided the reconstruction value currently is around 200K).
The point is if you do renovation on the 50+ yr old house then the depreciation would still hold for the overall age of the house and not different for rooms which you build/extended/renovated later. Am i right in this ?
Hi Soum
My gut feeling on this would be it’s too many eggs in one basket? I guess it depends on your own bank account. Myself, I would be inclined to feel it too great a risk for what you’d get back out of it.
My advice would be to sit down for HOURS with a calculator and go through every scenario possible until you find the best and worst case. How would you handle rising interest rates, hidden problems with the house that may come to light? I know of one home, sold for 900K 8 years ago, that had major plumbing problems from top to bottom. Be careful.
Redhaven
My home is 90 years old and is of a style which is in high demand.
There is no depreciation left in it which maybe what your friend was meaning.
best wishes,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Mortgage Hunter,
Are you saying that today if you sell your house you will practically get no value for your house ? Only the land value will remain ?Quite the opposite. People pay for the whole package. Noone will make an offer split into land and house value.
However if you had a Quantity Surveyor do a valuation on the property he would suggest a value for the structure but due to age it cannot be written off against your tax.
You must be aware of lovely old homes in your area worth a fortune!
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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