The danger that lurks in unreality TV
This guest post comes from Robyn Forryan of Property Magic
Many first home buyers will have been following the latest Auckland property programme Our First Home. Like me you were probably interested in the prices paid at auction. It may have even started you thinking about the idea of buying a do-up house and renovating it yourselves. Before you spend time checking out potential properties I thought you might find this information valuable.
In the unreality TV show the parents bought the house and the show gave them $100,000 for renovations but they had to pay only $50,000 back. In the real world you may struggle to find a bank who will lend you an extra $100,000 for renovations and if you do you will have to pay it all back with interest.
And there won’t be anyone offering thousands of extra dollars and prizes each week if you win a competition so you won’t have a house with as many gorgeous features as they did and going over budget on the décor will not be an option.
But that doesn’t mean you won’t be able to do it – it just isn’t likely to happen as quickly and easily as it did on TV.
Unreality TV also forgot to mention the costs that will eat into the “profit” the contestants made. Getting building consents from council, lawyers fees, real estate agents commission when selling, marketing costs and the tax which must be paid on any profit you make when you buy with the intention of reselling. These costs are all real and all reduce the potential profit quite considerably so they need to be factored into the costing’s research you do before you embark on any renovation project.
But what if you buy a project house to renovate and keep? Well then you can cross out marketing and real estate agent costs and paying tax because buying a property and holding onto it doesn’t incur these costs.
Doing renovations yourself if you have the skills and experience and the support and skills of family and friends can be a great way of getting more house (or a better house) for your dollars. It isn’t easy though and can take a very long time if you are also working fulltime to pay the mortgage. Employing tradesmen is expensive but usually necessary at some stage and living in a construction zone is uncomfortable and stressful.
Our First Home was interesting TV but tightly edited and extremely light on detail. If you are considering going down the renovation path please do some careful research based on reality before you make your final decision.
And in case you are wondering if I am qualified to comment on all this – I renovated my own home and bought, renovated and sold properties as a business for a time so I have experienced the good, the bad and the ugly and ended up creating the beautiful though not to the amazing standard of Our First Home. The difference is in the dollars.
Robyn has been in the real estate industry for more than 20 years. She has sold houses, rented houses, traded houses and now she is doing what she loves best – helping house buyers. Because of her varied experiences her advice is practical and honest as well as being independent because she is not a real estate agent but a house buyer’s consultant. She keeps her community informed about the property market, gives tips on how to buy a house and tries to help buyers with the techniques that will help them secure their dream home at the best possible price and with the least possible problems.
April 27, 2015 Tips for First Home Buyers