Hey guys,
My mother is considering renovating the family home and then renting it out as she no longer lives in it. I have given her the following 'to do' list.
1. Get 3 local real estate agents to give a current value and estimate what the value will be after the renovations.
2. Do up a list of works of everything that you can think of that needs to be done.
3. Get 3 quotes from different builders on doing the works.
4. Look at possibly hiring a project manager.
5. Get 3 local property managers to estimate current rental and expected rent after the renovations are completed.
6. Seek finance.
Is there anything else she should be doing? I don't have any experience yet in renovations so any advice would be appreciated.
A bit of further information, the house was last valued in 2009 at $300 000 and she currently owes $90 000 on it to her parents (no interest). After completing the renovations she wants to get the property revalued and seek to purchase a 2nd and possibly 3rd investment property. Any advice guys?
Regards,
Cubez
Minimise costs and go for it!
Also speak to your accountant with regards to specific advice regards being able to claim costs (depreciation, outgoings, management etc) as well as how any additional borrowing will be treated.
I haven't done personal renovations before since not being in the property game as of yet but being in the building trade id save my money, not hire a project manager and go too the nearest new estate and get quotes of the tradesmen you need. Most will do it a lot cheaper for cash if your not worried about receipts but get quotes because there are sharks out there
Hi Cubez
Wow sounds from the description you have laid out we are talking major structural changes to the house as you wouldn't normally engage a Project Manager on a simple home renovation with a standard licensed builder.
Now in regards to financing there are a couple of potential issues which probably need to be considered.
I am unsure as to how old your mother is but i assume she is 45 +.
Under NCCP consideration would be given to her serviceability and the ability to support any loan post the standard retirement age. Whilst i am not aware of any of her personal details you need to ensure that finance is a possibility before going much further.
As she no longer lives in the property i assume she has her PPOR elsewhere so at least that issue will be a plus point when it comes to financing as lender will not like the fact that she might have to sell her PPOR in order to repay back any outstanding loan.
Finally make sure that the increased rent / value warrants the capital expenditure.
Might just be easier to rent out as is and start investing.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
There is at least one lender that has a no age policy specific to investment properties (instead of PPORs). If the age and asset position is an issue then that lender may be appropriate.
Seek finance first to ensure that you can do the renovations that you want to do. I would also consider giving the PM a flick. Not sure how much value they can add. Your first point is fantastic though – always talk the guys selling houses in the area to find out the do and dont's of the area.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hi Cubez
I don't think you need to speak with three agents to have the property valued if you don't intend on selling it – its' a waste of time on their behalf and their "appraisal" of the property won't be considered by a lender when extracting equity. They will want to carry out their own valuation.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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