What are the costs of Buying New property VS Renovating existing home

A common question that is asked time and time again is whether it is worth selling and just buying a new property or just staying put and renovating the existing home. You may be confronted with this dilemma if you feel your home is outdated and due for an update, perhaps you purchased an older style established home to get into the market and now in a better position to look at upgrading or renovating. Nevertheless, each approach has its pros and cons, and everyone’s circumstances are different; before determining which one is right for you and your family’s there are some important points to think about.

Does the suburb still suit your needs?

Have a think about the suburb you live in and whether it is your ideal location, what has once met your requirements may no longer. Perhaps you are now thinking of school boundaries and looking to move into a particular suburb, moving into a suburb so you no longer have to make long commutes to work every day or just want to move out of town and into the country. On the other hand you may find that the location you are currently in has all the amenities you need, perhaps it’s close to schools, shops, public transport and not too far for work. Whether the suburb you live in still suits the needs of you and your family can potentially determine if you should buy new or renovate.

What are the costs involved

A major factor that can contribute to your decision is considering the costs involved in both options available to you.

Costs involved in purchasing a new home

  • Advertising and commissions – engaging a real estate agent to sell your home would attract fees for marketing and also commission. This could be thousands of dollars depending on what your house is worth and does not include the costs to stage your home in preparation of a sale.
  • Home loan fees – there could be certain fees related to your home loan and refinancing can require additional costs, there are also fees for early termination of fixed home loans.
  • Relocation costs – another major expense when buying a new home is the cost involved in moving all your furniture and belongings to your new home. Moving an average 3 bedroom home full of furniture according to moving quotes from Christchurch movers can cost an average of $2,500, expect to pay even more if moving long distances.
  • Stamp duty – Every time you purchase a property there is the cost of stamp duty and this can be a staggering amount and can add thousands of dollars to the purchase price. Calculate what stamp duty costs using available online tools at Real Estate.
  • Conveyancer fees – unless you understand the legal side of things, the conveyancer will charge for looking over the contract and is worth hiring to take care of what can be complex.
  • Building and pest inspection – it is recommended to get a professional to inspect the structural integrity of any home you purchase to be assured that there are no underlining repairs that can cost you dearly in the future.

Costs involved in renovating

  • Builder – of course a builder to carry out the project will cost money. This cost will depend on whether you are looking for supply and install or just install and manage the project. Engaging in a reputable builder that has the expertise to carry out your ideas and implement them the way you want is an important part to get right when choosing a builder.
  • Building materials – You may want to source your own tiles, flooring, bench tops, vanities and more so there are costs associated with purchasing and delivering items to the job site.
  • Variation costs – If there are any changes after signing the contract you wish to make, there will be costs associated with variations.
  • Drafting costs – you may require an architect, interior designer, structural engineer to look at your plans or engage in their services.
  • Council permit fees – Depending on how big the renovation project and the overall costs, you may be required to obtain building permits for council approval, so it’s a good idea to consult with local council before commencing work.
  • Costs of accommodation – You may need to consider moving out of your home until renovation works are complete depending on the size of the renovation.

The decision to buy new or renovate ultimately depends on what is best for you and your family. There are benefits to both, if you are a handy DIYer and not afraid to put in the hard work, then there are certainly costs savings here. However, if you prefer to move into a home where everything has been done for you and have the means to service the mortgage, then buying new may be a better option where you can move in and quickly get settled.

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What to consider when buying property to renovate

Due to the recent trend and home renovation shows, more and more people and choosing to improve the value of their home. There is a renovation boom at the moment, with house prices on the way up and no signs of slowing, it makes complete sense to buy on a budget and improve with capital. Let’s go over some of what you need to consider if you choose to go down the path of buying to renovate.

Calculate your budget

The budget is the single most important detail you must work out and get right from the beginning; otherwise you are setting yourself up for failure. Buying to renovate requires you to first budget for the initial purchase of the property and second to calculate a budget funds for the renovation portion. Home renovation can be as simple or as complex as you want it to be, a few cosmetics changes here and there and a fresh coat of paint can do wonders, whilst knocking down walls and building an extension requires more planning and consultation and inevitably increases the budget. Working out the costs involved to complete your renovation is important to prevent cost blow outs which can leave you with an unfinished product when the funds run out.

Consider your capabilities

Purchasing a house to renovate can be a very rewarding process; the sense of achievement upon completion is a satisfying feeling. However, making the decision to purchase and renovate does require a huge commitment, it is unlike purchasing a home that is ready to move in with nothing more to do. You need to consider your skills and be realistic about your renovation plans, not to mention the time and patience required, the willingness to live in an unfinished home whilst renovations are going on. Therefore, take careful consideration to the extent of your renovation works when inspecting potential properties to buy.

The right location

Choosing where to buy can make a big difference in the property’s value when renovations are complete. A safe technique that has been around for many decades is to buy the worst house on the best street. It is a much safer approach and often much easier to bring an average looking home up to the market value on a good street rather than renovating one in an average location beyond the location’s asking boundaries.

Cosmetic renovations

Renovation works can consist of both cosmetic and structural repairs, both can improve the quality of the house but it is only the cosmetics that people can see. When purchasing a house to renovate it is important to be aware of any structural repairs that may need attention. Structural repairs can be expensive and often require professionals, furthermore money spent on structural repairs do not generally increase the home’s value but are a necessary repair to get underlying problems rectified. Cosmetic repairs on the other hand are always visible and add to the overall value of the property when done well. Upgrading the bathroom or kitchen can visually transform a property and increase market value, whereas a termite infested structural beam must be replaced resulting in little or no rise in the property’s market value. Therefore, when looking at buying a house to renovate, consider getting a building and pest inspection report by a certified professional.

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