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.