Buying a run-down house in a good area has been a traditional way for first home buyers (and often second and third and more…) to take a shortcut to high equity and even mortgage free status. The old approach to buy the ‘worst house in the best street’ still echoes down the decades.
Existing homeowners often add tremendous value to their home with additions or renovations that better meets their living needs and creates a home of much greater value.
‘Flipping’ has also become a common topic on TV with American-made house renovation programmes focusing on the technique of buying old houses, giving them a quick (but hopefully good) makeover and then selling for a profit. Although flipping isn’t as easy as it looks, doing some hard yakka on your own home can be a way to get into a more expensive suburb than you might otherwise be able to afford.
But… there are a few reality checks…
The first one is that even if you go in with a building inspector or builder to look through a house, they can miss things. Building inspectors are not licensed, not regulated and some are worse than others. And without taking interior linings off the walls – doing a penetration check – you may have to guess what’s going on inside the walls. Leaky home renovation specialists often find much worse conditions than first estimated, and the notion of old builders being craftsmen is a fantasy – there has been a lot of really bad building work done for decades – which only gets discovered when the walls come off.
The second one is that often the economics won’t add up if you’re looking to do a quick flick. Unless you can get a really good deal or the actual work is largely cosmetic, you can end up spending so much money that when you come to sell there’s no return left.
And don’t forget, if you are buying to do up and sell quickly for a profit, you must pay tax on it.
Bathrooms are particularly susceptible to issues around water leaks, but the Leaky Homes issue in recent years has shown that leaks are not restricted to this area. Poor workmanship in previous renovations or even the original build may have serious implications for the work you’re planning – and as you get further in, it can get worse. And worse.
Thirdly, living in a building site is hard. If you’re working elsewhere and then having to come home to a cold, semi-built home that you have to spend evenings and weekends slaving away on until it starts to become comfortable can put strain on you and relationships. And the longer a build goes on, the harder it becomes emotionally to maintain that enthusiasm and drive.
Some work may need a licensed person to either do the work itself or sign it off. Weatherproofing (cladding/roofing), plumbing, electrical and structural work all need a licensed practitioner. You can apply to do the building work yourself, but you still need to meet the Building Code, your work still needs to be inspected, and it will be noted on the LIM, which may have an impact on perceived value.
You may think you are mentally and emotionally prepared for your renovation, but when the reality hits and your budgets are blown out, things may be quite different – almost everyone I know who’s been through a renovation is pretty stressed at the end. Be aware of those potential nasty surprises and make sure you have contingency in your budget. If you don’t need it, then you have a bloody good party fund to celebrate.
Keeping that warning in mind, renovating or adding to your house can be an exciting and very rewarding exercise. You already know the good and bad points to your home. If you like where you live, then improving the house you already know so well can dramatically improve your quality of life and improve its capital value.
Many NZ houses built between 1940 and 1990 have asbestos in the building products used – lino being one example – and also fibrolite and textured ceilings. Generally there is limited danger if the material is not touched but if you’re wanting to remove materials and your house is of this vintage make sure you test for asbestos before doing any demolition works.
For more information around building and renovating go here: http://www.buildingguide.co.nz/planning/renovations-additions-and-alterations/