House Extensions – Developer Style
Buying, renovating and selling is a very profitable industry for many developers. Quite often we come across those who seek the worst house in the best Street so they can renovate it and make plenty of money. Even if you are not only buying a home to make money this blog still applies to you. if you were considering a house extension, addition or renovation but also know that you may not be staying there forever then overcapitalising is not always the best choice. Below are some of the many important considerations to investigate prior to purchasing a home.
1. Check The Contract
When it comes to buying old properties to make money there are definitely many around. This means that it is quite common for us to come across a developer who has recently purchased an old home and he’s planning a renovation. Old homes bring surprises such as limitations which may affect the end result or outcome you had initially planned. Such surprises may include sewers or easements.
This is an issue because if you have to build over sewer then concrete encasement is a must due to Sydney Water requirements. This can be a very expensive exercise as concrete encasement is charged by the linear metre and also dependent on how deep the sur is. If this leads to digging and excavation but access to the site is limited and machinery cannot be brought in then costs will rise quickly and greatly. We can go on and on about how building over sewer is not the optimal situation but just ask your builder and you will find out why it is something to steer away from.
Easements are another issue. In some cases an easement can affect where you can and cannot extend or build. This is because an easement is the right of use over a property. Generally an easement may refer to the right of an adjoining property owner who has a segment through your property or land which has access to the road to run a sewer line.
2. Floor Space Ratio
Floor space ratio easy allowance of floor area you have to build in relation to the size of your lot. For example if the floor space ratio is 0.5:1 and you have a 1000 square metre block you are allowed to build 500 square metres. The definition of floor area can vary depending on whether you are applying for a development application or complying development certificate and the type of structure you’re building.
If there is currently no more allowance left for floor area this may be a hindrance to your desired outcome and therefore it should be confirm that you are happy with the space you’re allowed to use.
3. Hidden Issues
There are many hidden issues that can affect your ambitious renovation. These may include structurally deficient houses which will require many beams and support structures to be built to carry the extra weight you are proposing if you think you will be knocking out walls to open the space up. Many developers seek properties which may be greatly reinvigorated by only going through cosmetic works such as painting, changing doors and windows and other non load bearing changes.
Asbestos is another very common problem with old homes. Asbestos was not known to be dangerous back when it was used but is now a big problem as it has many damaging health issues. If you were planning to remove walls that have asbestos this may become a very costly exercise and you should be wary of this prior to purchasing a property to develop.
Other common issues with house extensions may include damp issues or termite infestation. A building inspection is definitely a good idea prior to purchasing a property you are considering to purchase a house to renovate, in order to make a profit.
4. Is It Adding Value?
Overcapitalising is very common as most people do not know what to look out for. When you are renovating or doing a house extension for profit you must always consider how much value it will add in the end.
Properties vary from suburb to suburb and due to this fact you must investigate which properties have been sold for more and for what reason. In some suburbs a pool maybe a very valuable part of the home, and in other suburbs a dormer which includes another bedroom maybe a highly valuable addition. This rule can even mean designing and building a new garage, just make sure the garage size is good!
Another factor that can assist gaining extra profit from a renovation includes the orientation of the home. If the orientation is good then the overall comfort of the home is much higher. A good orientation includes living areas facing north and receiving sunlight throughout most of the day but also utilising eaves which are large enough to block out the summer sun but not too large so the Wintersun can be admitted.
If the orientation of the home is poor, see if you can reconfigure the layout to adjust this and create a more sustainable dwelling. Insulation and ventilation are also very critical aspects of a sustainable home so look out for these too.
5. Look Beyond Cosmetics
Many people often check the kitchen and bathroom of a home and if they are fine then funnily enough they feel the home does not need much work. This is not true if you are planning to do a renovation that requires a strong structure. It is crucial to look beyond cosmetic fix ups that just make the house look good and hide the real issues behind them.
Also, if a house is not very visually impressive then it will also keep prospective buyers away and allow you to purchase the property at a better price. It is amazing how far colours and interior design can take an ugly place and boost the sale price, beware.
6. Best House In The Worst Street
Time and time again we hear “buy the worst house in the best Street”. It is frequent that a greatly located property is purchased for a far lesser a price then properties nearby. This is probably because those other houses have undertaken cosmetic renovations and made the home look much better. This is not too difficult so don’t be scared of buying a home in a great location even if it does require a lot of work. With a good team on the job, you will not only make large profits but also enjoy the journey.