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A Little Known Secret To Buying A "Renovators Delight"

6/7/2016

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Ever seen a house that needs a little TLC before you’d consider moving in? That’s how our client ‘Sally’ felt about a cottage she saw here in the Southern Highlands.

Sally was working way too many hours to even consider renovating herself. Yet the cottage was for sale as is and she knew it had potential.

“Liz, what would it take to buy this property?” she asked me. As a long term client I knew she was serious and was able to quickly assess that she could afford the property. “It’s definitely something you can afford Sally, the numbers stack up, let’s get you a pre-approval in place so you can make an offer with confidence” I suggested.

Sally was reluctant… the property needed new floors, had a very old-fashioned kitchen, and needed a good paint. “If I use my cash to buy this property, I won’t have much left over for renovations, so I’m not sure it’s a good idea” she said, thinking out loud.

She was right. To bring the property up to standard she had calculated around $40k to $50k of works before she would feel comfortable living there. However, all was not lost! “What about obtaining a build contract for the works to be completed? We can then finance a majority of it as a construction loan after settlement, and this way you won’t need to renovate yourself?” I suggested.

Sally liked this idea, given that she could afford the repayments on an additional construction loan, and it meant she would have a qualified builder looking after the renovations. As we all know too well, renovating ourselves can take ten times as long as paying a builder!

Sally went out and obtained a few quotes, found a builder she got on well with, and engaged him to provide a formal quote, plans and specifications. We then used this to obtain a bank valuation on a construction basis, so that the bank was able to take into account the additional value the construction works would add. This then enabled us to finance a majority of the build, which meant Sally could safely make an offer knowing she could work towards a completed product.

In the end, Sally completed her renovator’s delight and was very happy with the result.
We have many clients just like Sally that are investors, home owners, or renovators that seek finance to renovate.

​
Names, locations and minor details have been changed to protect our client’s identities. 
​

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    Author

    Liz Wilson has been working in finance for twenty two years now. She regularly blogs on industry topics and here you will find over a hundred personally written blog topics and case studies...

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  • About Us
    • Why Use Us?
    • Testimonials
    • In The Community >
      • FOWAS Dog Training
      • 2024 Southern Highlands Biggest Bake Off
      • 2023-southern-highlands-biggest-bake-off
    • Our Team
    • Enquiries
    • Privacy Statement
  • Home Loans
    • Investment Loans
    • Calculators >
      • Stamp Duty Calculator
      • Income Tax Calculator
      • Borrowing Power Calculator
      • Budget Planner
      • Extra Repayment Calculator
      • Home Loan Offset Calculator
      • Property Selling Cost Calculator
      • Property Buying Costs Calculator
      • Hardship Contact Lines - Mortgages
      • Hardship Contact Lines - Equipment
    • Aussie Expats and Foreign Investors
    • Deposit Bonds
    • Medical Professionals
  • Cars & Equipment
    • Car, Truck and Equipment Finance
    • Get A Quote
    • Car Buying Service
    • Car Loan Application Online
    • Solar Finance
    • Car Buyers Guide
  • Financial Planning
  • General Insurance
  • Blog
  • Contacts
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    • MyConnect
    • Resources
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