The magic word that separates dud buys from dream buys
If you’re buying a home, why not buy one with “potential”.
“Potential” can mean many things in houses for sale. That can mean “potential” to create the perfect home, or “potential” to add value and climb the property ladder. It could mean “potential” as a suburb gentrifies or the local school goes up in desirability.
It could also mean “potential” to earn an income from a “home and income” property that comes with a legal flat, a self-contained guest suite or room in the home that can be let to flatmates, boarders, international students or Airbnb guests.
Sometimes the potential isn’t always obvious. You may even need a good surveyor or architect to really identify the potential.
Write down what you’re looking for to create a shopping list. Then set up a saved search that isn’t too specific.
Doing the numbers
The dream and reality of potential are two different things. Do-ups can be money pits so you need to do the numbers. What will it cost to buy, how much will the work cost and how much you can realistically sell for afterwards if it’s a quick flick. It’s a good idea to become a spreadsheet ninja and/or get professional input from architects, surveyors, quantity surveyors and others. The more time you do planning the less trouble and cost you’ll encounter.
Do-ups
Do-ups are as Kiwi as paua and pav. Many young couples jump a couple of rungs on the property ladder thanks to putting in blood, sweat, tears and money to turn around a rough diamond into home magazine tucker.
Property investors and traders have taken the do-up to the next level. They know that a clever renovation will a: allow them to have the property revalued and release capital for their next purchase, b: command more rent increasing their yield on a rental property, and c: ultimately result in capital gain. Traders are looking for quick flips and/or cheap improvements that pay handsome dividends.
They look for:
• Sections that can be subdivided
• Walls that can be moved added to increase the number of bedrooms.
• Easily added en-suites. One bathroom just doesn’t cut it these days for many buyers.
• Kitchens and laundries that can be converted to bedrooms. .
• Basement conversions.
Worst house in the best street and school zones
If it’s an owner occupied property you’re looking for, the potential may be in buying the worst house in the best street or school zone. If you can get your children into a good school then it could be well worthwhile spending time and money on doing a less than desirable home up.
Watch the markets
Do your homework and know your market so you can spot bargains. Whatever you do keep a beady eye on properties for sale as they’re listed.
One buyer’s problem can be another buyer’s potential. So look long and hard at properties that don’t sell instantly. If you can solve the problem that turns others off buying, you might be able to buy cheaply.
