BUYING TO RENOVATE

For young people and first time homebuyers a popular purchase is a home in need of renovations.  The attraction is a comparably lower price situated in a well-established neighbourhood featuring high quality schools, great shopping, community centres and transit facilities your family can enjoy.

Step One: Identify the Neighbourhood

You have gone to the bank and identified how much you will be able to spend.  You have given me a call and scheduled a meeting with me to discuss your project.  Now what?  The key to purchasing a fixer-upper, like all real estate purchases, is patience.  When you buy any property, the purchase price contains some value from the structure itself, and some from the amenities in the nieghbourhood.  Your future purchase will be more weighted on the neighbourhood than the house because the house is not in good shape.  When you buy a home like this, you must buy in a good neighbourhood.  So the first step will be to research all the potential areas that make sense for your lifestyle.  Is it an urban setting or a rural one? Are amenities close or at a distance?

Your home’s distance from work is another important factor.  The price of fuel and auto maintenance can consume your budget quickly.  Your time is a valuable commodity that needs to be taken into consideration.

This step will require a consultation with me because in some neighbourhoods it will not make financial sense to do certain upgrades to the property.  This is why choosing a good neighbourhood is so critical.  A house can be over-improved.  That is when a home has so many features that a homebuyer will not be willing to compensate you for those upgrades when they consider the location of the property.  In every area there is a limit to how much someone will pay to live there, regardless of how luxurious it may be.  This is a difficult but important concept that I will explain to you, I will show you previous sales in the area you are considering.

Step Two: The Dream, The Vision

Now I am sending you all the properties that come up in your area that you can afford. We often schedule visits to tour the properties, but you are not certain what you should be looking for.

Ask yourself are you going to live in the home a long time or simply remodel it and move quickly?  Do you have the skill to renovate yourself or will others assist you?

Here is a trend to consider: Before any sale, you will need to make an ensuite bathroom for the master bedroom. It is not optional! Why? For the past few years now, the people who buy homes that are ready to move in, with luxurious finishes, will not even look at houses without an ensuite bathroom in the master bedroom.  I will say it again: They will not even look at them! That means, they would rather buy nothing than your property.  If you don’t have this feature, you are narrowing your potential purchasers basically to new immigrants, people looking for a step-up home, and people who are buying to renovate, but if you’ve already renovated, and are asking on the high end for your neighbourhood to recover your expenses, its not going to make sense for them.  Doing this presents challenges, some houses may be easier than others.  You may have to lose a bedroom, which has the potential to decrease the value of your property. Once you have committed to this major change, you should consider creating a walk in closet as well.

The house structure and lot dimensions will reveal what attributes it will be able to support.  How many bedrooms could you squeeze out of it? How large of a garage would be possible? Could you build a patio?  Does it have air conditioning?  Is the furnace or electrical system obsolete? Structural problems can be identified with a home inspector.  Will it need a new roof, brickwork / siding, windows, or insulation?  How much will it cost to do these renovations?  What problems does the property have that cannot be fixed?  Local zoning regulations will have to be researched to establish your plans can be legally achieved.

Once the house has been found, the most important thing you need to bring to the entire project is a vision.  A dream of how the home will be improved.  What are you going to do to make the home worth all the work you are going to put in?  Your challenge is to make this house the best in the neighbourhood.  A gormet kitchen, skylights, and built in cabinets are good starts.  Remember with a house, the important features are kitchens and bathrooms, so some renovations with good return on investment will occur in these areas.

If your plan is to live in the home for many years, your renovations can include things that you enjoy and not geared towards financial considerations.  Here are some things that potential purchasers are rarely willing to pay for:  a wine cellar, home entertainment integration features, and swimming pools.

So, you finally found the perfect home you want to invest your time and money into.  Together, we will negotiate with the seller to get a price that makes sense for your plans.  This negotiating can be very hectic and take longer than you expect.  You will be buying evaluating the property from a financial perspective relying on a calculator, while the seller has an emotional attachment to the property and will have difficulty in seeing what a state of disrepair it is in.  Just remember not to give up or get frustrated, the first house you like may not be the one you buy.  You must be patient and persistent at all times in order to get the best deal for you and your family.  Whatever your plans are, just make sure you call me to assist you in this challenging complex endeavour.