Melbourne’s real estate market is no stranger to fluctuations. Amidst the ever-changing trends and significant growth in median prices we have seen over recent years, fixer-upper houses have captured the attention of long-term investors and first-home buyers alike.
But what exactly is a fixer-upper? A fixer-upper is a property that requires significant home renovations, repairs, or updates, and as such, often comes at a lower price compared to a move-in-ready home. Owners can either progress with ‘flipping’ the property, which involves selling for a profit, or simply sit back and enjoy their new home after completion of work.
In this article, our specialists at Noel Jones will delve into the advantages and drawbacks of purchasing fixer-upper houses in Melbourne, offering valuable insights for those considering this type of investment.
The Pros of Buying a Fixer-Upper House in Melbourne
Affordability
Let’s start with the primary advantage of fixer-upper houses – greater affordability.
Given how an old house may need some renovations, many potential buyers could be detracted from making an offer. Those willing to inject a bit of sweat equity and extra time or investment, however, can find an excellent opportunity to invest in up-and-coming neighbourhoods where home prices may be on the rise, either as their first house or with the purpose of flipping.
Before getting started, it is important to factor in the future costs of any creative home renovations, such as hiring a contractor and new materials.
Customisation Possibilities
Fixer-upper houses are a blank canvas. As such, an old house renovation allows homeowners to tailor their living spaces according to personal preferences, or investors to redesign a space towards what modern buyers are looking to purchase. Creative home renovations can transform a fixer-upper into a one-of-a-kind property, ranging from kitchens and bathrooms, bedrooms and living areas, all the way down to fixtures, fittings, and colour schemes.
Increased Return on Investment
As mentioned above, fixer-upper houses can potentially yield higher profit margins, especially for those experienced in flipping property. A property’s value can rapidly appreciate through strategic home renovations, making it a lucrative investment with a solid return in only a matter of months.
Environmental Benefits
Opting for a fixer-upper contributes to a more sustainable approach by reusing existing structures and reducing construction waste. As you renovate, you can incorporate eco-friendly materials and energy-efficient solutions, further enhancing the property’s environmental impact and long-term value.
Sense of Accomplishment
Transforming a fixer-upper into a beautiful, functional space provides a sense of pride and accomplishment. Additionally, the renovation process can help you develop new skills and knowledge in the realm of home improvement, making it a rewarding experience.
The Cons of Buying a Fixer-Upper House in Melbourne
Hidden Costs
First-house fixer-upper properties, although available at a lower initial cost, often come with unanticipated repairs and upgrades that can strain your budget and create financial stress. It’s essential to be prepared for these expenses.
Time-consuming Process
Renovating a home can be a lengthy process, especially when dealing with delays from permit approvals and hiring a contractor for various tasks. This may cause disruptions to your daily life and require a significant time commitment.
Financing Challenges & Risk of Overcapitalisation
Securing loans for fixer-upper properties can be more difficult due to their condition. Higher interest rates and insurance premiums may also apply, making the overall cost of homeownership more expensive than first anticipated.
What’s more, investing more money than the property’s potential value may lead to challenges when recouping costs during resale.
Stress and Lifestyle Disruption
Balancing renovation work with personal and professional commitments can be challenging. Living in a construction zone or temporarily relocating may cause additional stress and disrupt your daily routine.
Tips for Navigating the Fixer-Upper Process in Melbourne
Conduct Thorough Research
Take the time to research the local real estate market and identify desirable neighbourhoods and property types before investing in a fixer-upper.
Hire a Professional Inspector
Obtaining a detailed assessment of the property’s condition from a professional inspector can help uncover potential issues before purchasing.
Budget Realistically
Allocate funds for unexpected costs and prioritise renovations based on necessity and value-adding potential.
Seek Expert Advice
Consult with real estate agents, architects, and contractors where possible. Attending seminars and workshops on home renovations can also provide valuable insights.
Be Prepared for Challenges
Develop a flexible mindset and contingency plans. Maintain open communication with all parties involved to ensure a smooth renovation process.
Speak with Our Specialists at Noel Jones to Find Fixer-Upper Houses & Renovation Projects in Melbourne
If you’re looking to buy an affordable first house or are interested in flipping property, speak with us at Noel Jones for help in finding fixer-upper houses in Melbourne. Call +61 3 8813 3208 or send an email to corporate@noeljones.com.au today.
