Renovating an ‘ugly duckling’ property can boost the value of a house and let you create your ideal home. How can you tell a genuine bargain from an overpriced wreck?

Quality home renovations can drastically improve a property’s value and liveability. However, it’s all too easy to get caught up in a downward spiral of expensive works. Here’s the Domain guide to buying the perfect fixer-upper. Find your ugly duckling

As with any property, location is king. Buyer agent and reno guru Patrick Bright suggests targeting shabby properties in suburbs with general upside potential.

‘The inner ring of capital cities is a good place to start, as it’s the most bulletproof part of the market,’ he says. ‘Look for areas with decent infrastructure, but make sure you’re not on top of it. A new rail line is great, but not if you can hear it.’

Do you research to understand critical background information; filtering your Domain search with keywords like ‘renovator’s dream’ is also a good way to start. Look out for deceased estate sales, as these properties are often ripe for renovation. Do the maths

Your budget must be nailed down before you even think about putting in an offer. A key part of that is working out how much renovating will cost and how much value it will add.

To do this, you need to know the value of renovated properties in your target suburbs. To find these, filter your Domain listing search using keywords like ‘new kitchen’, ‘freshly renovated’ and so on. You can also research actual sale prices.

Inspect as many ‘finished’ properties as you can to check out the quality of fittings and fixtures. When you get home, price-check key renovation zones like kitchens and bathrooms and work out how much it would cost to carry out that renovation.

Once you know what a renovated property in a given suburb is worth and how much it’s likely to cost to bring a run-down house to that level, you can work out your maximum purchase price. Every dollar you save under that figure is pure profit. The biggest bang

It’s all about looking for the opportunities when inspecting a potential buy. Cosmetic renovations usually give you the biggest bang for your buck, so an old kitchen or bathroom should be a big tick for aspiring renovators.

Bright suggests looking for opportunities to add walls to create new bedrooms (or studies) or removing walls to make open-plan spaces. Also look out for small windows – especially if there’s an outlook. ‘You can introduce natural light or a view by installing a larger window,’ he says. Avoid hidden costs

Bright’s major no-no is any property that harbours ‘hidden costs’. ‘I avoid properties that involve invisible work such as rewiring or new plumbing. If I spend a dollar, I want people to see it.’

A pre-purchase building inspection is therefore essential. You should also investigate if there are any legal or heritage restrictions which could stop your grand designs in their tracks. Don’t spend too much – or too little

Staying within your budget when renovating is critical. Anyone who has watched a prime-time renovation show knows the danger of going over budget. However, skimping on your reno can be just as dangerous.

‘I see a lot of renovations where people try to save money, usually because they’ve paid too much for the property,’ says Bright. ‘For example, they install cheaper tapware, tiles and carpet, or skip on installing a bath.’

A cheaper reno may save you money in the short term, but it will also reduce the appeal to potential buyers – and therefore the eventual sale price. Cheaper fixtures and fittings may wear faster too.

Your worst enemy when viewing property is yourself. It’s all too easy to get carried away and see a potential goldmine when it’s actually a run-down wreck. Those rose-tinted glasses will soon shatter once you’re knee-deep in paint cans and bad wiring.

Keep your emotions out of the selection process and your fixer-upper will become your palace – and a profitable investment in the long term.

Posted by Kevin Eddy – Domain (Fairfax) on 28th October, 2014