Pitfalls to avoid when investing in property market with a 'fixer upper'
Buying and renovating a property that's in a state of disrepair is not necessarily a surefire way of making a bundle in real estate.
That applies especially to first-time buyers warns Joseph Sakoneka, who's a registration manager at the Estate Agency Affairs Board (EAAB).
He says acquiring a fixer upper is only a viable proposition if you get the expert advice of a registered estate agent or inspector about the condition of the property.
They'll be able to tell you if this is a good decision from an investment perspective or if you should just walk away.Joseph Sakoneka, Registration manager - Estate Agency Affairs Board
As a first-time buyer you wouldn't necessarily be able to establish the extent of the repair costs that will have to be incurred at a later stage.Joseph Sakoneka, Registration manager - Estate Agency Affairs Board
You don't want to obviously incur costs that you can't even recoup with a later sale or rental.Joseph Sakoneka, Registration manager - Estate Agency Affairs Board
There should be a trade-off between the benefit of obtaining a lower bond and the expenses still to be incurred to get the property into shipshape condition. Also, be aware of latent defects.
These are the defects you wouldn't necessarily be able to identify on inspection. They will only become apparent once the property has been transferred.Joseph Sakoneka, Registration manager - Estate Agency Affairs Board
As holds true for any property purchase, says Sakoneka, location is key.
The reason for that is people want to have access to amenities such as the freeways, creches... In the context of a fixer upper, if the location is right but it's not a good deal, it doesn't then change the equation, you should still walk away.Joseph Sakoneka, Registration manager - Estate Agency Affairs Board
For more advice on venturing into fixer upper waters, take a listen:
This article first appeared on 702 : Pitfalls to avoid when investing in property market with a 'fixer upper'
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