Whether you want to renovate it for profit or to live in, there are certain hurdles you need to be aware of before jumping in. Take a look at our list below.
Space and access
When renovating a house, there is plenty of room to store materials and clutter from a renovation in the front and back yard. However, renovating an apartment in a multi story building has its limitations. Imagine trying to negotiate lifts and narrow hallways with piles of timber or bricks. This extra work and effort could cause your labour costs to rise.
If you have not purchased an apartment yet, consider whether it would be worth finding an apartment on the ground floor if you are planning to do major renovations, it will make it easier for both you and your tradies.
As with most apartment renovations, you will have to run your plans past the Owners Corporation, who represent all the owners in the apartment building.
It could take weeks or months to get the stamp of approval from the committee and you may even be required to change your plans if they do not meet the requirements of the committee. For example, if you were planning to rip up the carpet and replace it with floorboards, the committee could possibly decline this as the work may be too disruptive towards your neighbours. So, before you begin, you need to remember that you may not have as much free rein as you initially expected.
When you are in close quarters with your neighbours who only live a few metres away, noise is a big factor.
With the constant noise of power tools plus tradies coming and going every day, it may upset a few of your neighbours. So, in order to avoid this, implement a pre-emptive plan in order to keep them on your side. Speak with your neighbours before commencing work about what your plans are and when the projected finish date is. Aim to complete the renovation as quietly and as quickly as possible, being mindful of what hours you work. Try to stick between 7am and 5pm during the week, 8am and 3pm on Saturdays and try to avoid work on Sundays all together.
Another hurdle that could cause problems with your neighbours is if you need to turn the power or water off. Depending on the building, the hot water and gas may run on a communal system, which means the whole building will need to be turned off if you need it turned off.
If this is the case, then you need to be extra considerate of your neighbours. Provide your neighbours with plenty of notice and give an exact time and date. Also, try and aim for a time of the day that will be the least disruptive. For example, don’t have you contractors turn it off at 7am in the morning as most people will still be at home getting ready for work or school.
With any renovation project, your aim should not only be to make it more comfortable for you to live in, but to add value that you will get back when you sell. Renovators always need to be aware of overcapitalizing or spending money on things that don’t lead to an increase in value. Do thorough research to ensure you are spending your money on the right things. Chat to real estate agents and share your plans with them. They should be able to give you a realistic idea of how much value your renovation will add to the property. You can also research properties that have sold in your area to see what impact a new bathroom, kitchen or flooring can add to the value.
Funding the renovation
Where will the funds come from for the renovation? Some people fund renovations from savings, while others have built up equity in the property due to paying down the loan or increasing property values. Other renovators need to rely on the “on completion” value of the property once the renovation is complete to borrow the funds. If this is the case, then the loan you need will most likely be a construction loan and the renovations completed by a licenced builder with a fixed price contract.
If you are going to increase your loan to access your equity, it may be a good opportunity to refinance at the same time to secure a cheaper rate and better features.
Even though you can make a great profit with renovating apartments, they do have a separate set of hurdles you need to be aware of. Make sure you take these into account before you begin work.
Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.
For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.