Suburbs with renovation potential

A good indicator of a suburb having renovation potential is a broad price range. API mag (or was it one of the others?!?!) did a great feature on this a couple months ago. Ideally with a reno project you want to buy a house below the median price for the suburb, but not the lowest in the suburb, and sell it above the median with good profit, but not the highest price.

A suburb with median price of $500k and sales ranging from $420k – $650k is fairly narrow and may have limited reno potential. But a suburb with median of $500k and sales ranging from $300k – $700k would likely give you a better outcome.

Once you have found a suburb that demonstrates a wide range of sales prices, look for house pricing of unrenovated properties and compare this to renovated properties. Can you consistently see a reasonable price difference? Is there profit to be made? Ensure you’re familair with the suburb and are not comparing low priced homes in the undesirable pocket next to X area with the more expensive street closer to the river, for example.

absolutely luke – compare apples with apples, just damaged, bruised, dull apples with shiny, polished apples!

Like development it’s important to know your end market, who you will be selling to and for what price, once you own that space you can work backwards through the marketing, renovation work, purchase price/location/property type to work out a detailed feasibility study to arrive at your present position!

Hi Waydo,

We are just starting to learn about reno's as our preferred strategy as well. What we have learnt so far – as Luke86, wisepearl, Allen_A and Catalyst have pointed out is probably most important thing to look at first is "what is your target market?" – first home buyers? empty nesters? young profesionals? reitrees? Without knowing that you really have no idea about what property you are targetting (no. of rooms, proximity to transport,infrastruture, single level or two storey, 1 car spot or 2?) Each market generally has some fairly specific requirments or things they're looking for. e.g. retirees- kids have moved out and grown-up, likely grandchildren around and increased need for medical facilities access due to their increasing age. Typically (not exactly….typically) – from other investors we've spoken to – reitrees are then looking for: 3 bedrooms; either main for themselves plus 2 extra for kids & grandkids to all stay at once, or 1 each (apparently a lot of older couples sleep separately to get a good nights sleep) with 1 still left over for when the kids and grandkids come to stay. Typically they also want an ensuite for when they get up in the middle of the night for the 7th time (don't want to be frequently stumbling down the hall in the dark), all on single level to avoid stairs, easily maintained gardens, close to medical facilities and shops as I said. This then gives you the starting point to allow you to conduct further due dilligence (most important term we're learning) into: suburbs that provide the above, allow you to purchase, add-value and sell at profit. We're also learning the numbers and finance is the key – If the numbers don't stack up – i.e. you can't purchase, hold, renovate and sell and still make profit….move onto the next potential deal. Don't get emotionally attached, don't renovate a house to include all the things you want in a house. You aren't buying it-someone else is. Work out what they want (target market)…make it for them and sell it to them (at a profit). The tricky bit is all the due dilligence, hard work, number crunching and sourcing finance bit in between. That's what we have learnt so far. We have not yet completed our first reno, but are preparing to start our first one in Perth next year. Hope this helps.

Hi Waydo,

Just touching base to see how your year has ended up mate. Hopefully all going to plan.

We are still working towards doing our first reno in Perth next year. Heaps going on for us.

Would be keen to catch up via email. Are you still at [email protected]?

Our hotmail account got hacked so we couldn't use it anymore. Our new email is: [email protected]. Sorry if you had emailed us and we never replied.

Will try and get you at your gmail account anyway.

Chat soon.

Jye and Tahnee.  

Hi ,Catalyst

You're right "end price and reno costs." 

Worst house in the best street so my rule of thumb.

Make sure their is a big differed in what you are buying at and what the suburb cap price is for your particular dwelling. 

Local agents can help guide you on this one, talk to a minimum of 3 to get a good range.

P.S. I think Toongabbie and the Backtown areas is ideal. check out what you can buy http://www.elderstoongabbie.com.au/real-estate/buy-residential-houses/ put a garrny flat on it and $ bob is you uncle!