After a few posts in the last few days trying to nut out the direction I should take I decided that it would be the right idea for me to buy my own property with the intension to renovate it then buy another down the track and rent the first one out. Funnily enough the house I am currently renting has come up for sale and the land lord has offered it to me. The house is an old 4 bedroom house in Sunbury Victoria and is in need of renovating, which is perfect. Since I have been in the house it has been restumped, plumbing done, new kitchen and hot water system, so most of the boring pricy stuff is done.
The question I would like to ask is if anyone has done anything like this before and if they have got any advice on what to look out for? Also what would I be expecting to spend on renovations? The house is about $190K in good condition but it has had nothing done to it for 40 years except what I mentioned.
Any advice would be appreciated.
Hi,
The advantage to what you have mentioned is that because it will be your PPOR, if you decide to sell rather than rent out it will be CGT free. Plus if you sell it to move to another house you may be able to claim stamp duty savings.Also you are in a good position to do due dilligence. You live there so you can inspect all you like. The things I’d look at when evaluating in this situation is:
1. why was it re-stumped? Just standard maintenance or is it water damage, termites etc…
2. Is it structurally sound?
3. Are there cheap reno’s that can actually significantly increase the value? You would be in a good position to determine that. eg: heating/cooling, kitchen, paint, carpet, tiles?As far as how much do renovations cost… well it depends on what you want to do. I’d suggest getting some literature on the subject. There are some great DIY books around (search amazon.com) that give you all the detail about how to do things and what sort of things are easy and so forth. If you think you could make $20,000 off 3 months reno ask yourself how much work are you willing to do for $20k?
cama_20,
Your situation is quite favourable, as well your knowledge of the property (having lived in it already) you are in a good position to buy the property at a reduced rate. The current owner will have to seek your permission to show any other perspective buyers around.
In WA (unless you agree otherwise) 7 days written notice is required to enter the property. This is a big negative for the owner (or their agent) wanting to show people through. You don’t need to be nasty about it, but it gives you an edge to make a lower offer. I bought my first house this way.
Damo.
I am not sure if that is the case in VIC I think that it is only 24 hours notice. However you are right that i can still be quite difficuly for them.
You say you brought your first house this way. How did it work out for you? Is there anything i should look out for?Has anyone else done this before?
Hi,
I would treat this as a “what goes around comes around” situation. Play nice with the owners trying to sell. If you make things difficult so you can put in a low offer you may find the difficulty could be thrown back at you later down the track.I’d say use your knoweldge of the house to make a good judgement about whether to buy or not. Obstructing a sale is not very nice, I’m sure you wouldn’t appreciate it, and you never know when that sort of thing will blow up in your face. Like what if the owner doesn’t like your difficulty and evicts you? That’s not good [glum2]
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