What am I going to do with my house?
April 7, 2010 5:16 PM Subscribe
We own two thirds of a crappy house in a really good spot, we're useless at handy work and we want to leave in 2.5 years. What’s the best way to capitalise on this asset?
Our house has tripled in value since we bought it about 9 years ago, and the area we are in (Ipswich) is the fastest growing in the state. We are on a corner (two road access), are opposite a large park, walking distance to a university campus, primary (elementary) school, high school, new transit centre, 2 minutes drive from the CBD. Our house is the worst house in a very nice street and other houses in the street are selling for between $500,00-750,000. We even have enough backyard to be able to subdivide into two properties.Yay for us. All good so far.
The house needs renovations. The back door opens directly on to the toilet. The gutters need replacing, there’s no fence, the garden is attrocious and a major retaining wall has a large crack, house needs painting inside and out, a kitchen & bathroom renovation (the people before us painted the bathtub and we’re still removing paint flakes every time we clean it), and the polished wood floors need sanding back and re-varnishing. The front deck has rotted wood under the tile.
We’re hopeless handy-people. I can’t keep the garden under control, and even though I’ve painted some of the rooms, each one took me a week (full-time) and does not look like a professional job. We just don’t have the skill between us to do the renovations. We also have two teens living here (post high school, pre-financial independence) which is the reason for our timeline.
This was our lucky financial break and is our only asset. We maxed out the credit card, and ate noodles for a year to buy this place at $100 000, basically our one chance to enter the property market. All signs point to population growth increasing substantially over the next ten years, so I kind of want to hang on to this place. On the other hand, me and Mr b33j plan on moving in 2.5 years to Canberra over a thousand kilometres away, and keeping on moving every 2-5 years until retirement age. We have cats, so renting will be difficult but hopefully not impossible. For the current value of our 4 bedroom house, we could maybe buy a 1 bedroom unit.
Now what? Do I refinance the house to get money to pay someone to do renovations, and how do I know what would be the best use of that? Do I subdivide, sell one block, use the cash to renovate the house and rent it out? Do I sell as is (in 2.5 years) without the headache of renovating, and let someone else capitalise on the position? Who (apart from metafilter) would be best to contact for advice? Can I assume a real estate agent who will have to wait at least 2 years for a commission would give me advice in my best interests? Have I forgotten something glaringly obvious?
Our house has tripled in value since we bought it about 9 years ago, and the area we are in (Ipswich) is the fastest growing in the state. We are on a corner (two road access), are opposite a large park, walking distance to a university campus, primary (elementary) school, high school, new transit centre, 2 minutes drive from the CBD. Our house is the worst house in a very nice street and other houses in the street are selling for between $500,00-750,000. We even have enough backyard to be able to subdivide into two properties.Yay for us. All good so far.
The house needs renovations. The back door opens directly on to the toilet. The gutters need replacing, there’s no fence, the garden is attrocious and a major retaining wall has a large crack, house needs painting inside and out, a kitchen & bathroom renovation (the people before us painted the bathtub and we’re still removing paint flakes every time we clean it), and the polished wood floors need sanding back and re-varnishing. The front deck has rotted wood under the tile.
We’re hopeless handy-people. I can’t keep the garden under control, and even though I’ve painted some of the rooms, each one took me a week (full-time) and does not look like a professional job. We just don’t have the skill between us to do the renovations. We also have two teens living here (post high school, pre-financial independence) which is the reason for our timeline.
This was our lucky financial break and is our only asset. We maxed out the credit card, and ate noodles for a year to buy this place at $100 000, basically our one chance to enter the property market. All signs point to population growth increasing substantially over the next ten years, so I kind of want to hang on to this place. On the other hand, me and Mr b33j plan on moving in 2.5 years to Canberra over a thousand kilometres away, and keeping on moving every 2-5 years until retirement age. We have cats, so renting will be difficult but hopefully not impossible. For the current value of our 4 bedroom house, we could maybe buy a 1 bedroom unit.
Now what? Do I refinance the house to get money to pay someone to do renovations, and how do I know what would be the best use of that? Do I subdivide, sell one block, use the cash to renovate the house and rent it out? Do I sell as is (in 2.5 years) without the headache of renovating, and let someone else capitalise on the position? Who (apart from metafilter) would be best to contact for advice? Can I assume a real estate agent who will have to wait at least 2 years for a commission would give me advice in my best interests? Have I forgotten something glaringly obvious?
Get planning permission in place and sell it as a teardown.
posted by jokeefe at 6:07 PM on April 7, 2010 [1 favorite]
posted by jokeefe at 6:07 PM on April 7, 2010 [1 favorite]
By which I mean have permission ready to go for whoevery buys it to tear it down. Get the necessary approvals and permits and have them on hand. Sell the property as a package: the buyer gets the lot and all its potential, and having the permits in place will increase the value hugely, as well as saving you having to do renovations (which may be fruitless anyway, if the new owner pulls it down).
Caveat: I live in an insane property market, so my ideas are generally based on what happens in my mother's neighbourhood when an older property needing renovation goes on sale.
posted by jokeefe at 6:11 PM on April 7, 2010
Caveat: I live in an insane property market, so my ideas are generally based on what happens in my mother's neighbourhood when an older property needing renovation goes on sale.
posted by jokeefe at 6:11 PM on April 7, 2010
Layperson observation - I often see houses in Melbourne in terrible condition go for as much as, or more than renovated places. People like to have a dream, rather than live with someone else's new, but not to their taste, dream.
I wonder if getting a valuer, as opposed to a real estate agent to do a valuation, would give you some better sense of what your different options might be worth. You will have to pay them (real estate agent will do it for free, probably), but it is probably more independent advice.
Poking about to find other places that have been subdivided might give you a sense of the numbers for that scenario. Also depends on your mindset and whether you want to deal with either renovations or development. If you are relatively ok with the house as it is, I think many people who have lived through renovations would recommend that you don't, for reasons of comfort and sanity.
posted by AnnaRat at 3:23 AM on April 8, 2010 [1 favorite]
I wonder if getting a valuer, as opposed to a real estate agent to do a valuation, would give you some better sense of what your different options might be worth. You will have to pay them (real estate agent will do it for free, probably), but it is probably more independent advice.
Poking about to find other places that have been subdivided might give you a sense of the numbers for that scenario. Also depends on your mindset and whether you want to deal with either renovations or development. If you are relatively ok with the house as it is, I think many people who have lived through renovations would recommend that you don't, for reasons of comfort and sanity.
posted by AnnaRat at 3:23 AM on April 8, 2010 [1 favorite]
We live in a hot property market in Toronto and it seems like nearly every home that changes hands gets gutted for modern wiring, plumbing, additions, etc... so jokeef's idea is smart.
You could also be looking at living through 2.5 years of dirty renovations (not to mention the possibility of getting ripped off by a contractor).
posted by bonobothegreat at 6:45 AM on April 8, 2010
You could also be looking at living through 2.5 years of dirty renovations (not to mention the possibility of getting ripped off by a contractor).
posted by bonobothegreat at 6:45 AM on April 8, 2010
Is it a queenslander?
If so, this is what I might do to maximise profit, and it doesn't involve renovating.
Find out about sub-division potential. Invite a real estate agent to come and appraise and pick their brains about options. Don't, of course, sign anything. But you knew that.
I'd then suss out how much house removers pay for queenslanders and spend the next 2.5 years doing as much as possible of the development applications etc yourselves to maximise your profit when you line up a buyer who wants a development. You've got a good lead time, an excellently positioned property, and you'll save money by not doing anything to the house.
posted by Kerasia at 3:09 PM on April 8, 2010
If so, this is what I might do to maximise profit, and it doesn't involve renovating.
Find out about sub-division potential. Invite a real estate agent to come and appraise and pick their brains about options. Don't, of course, sign anything. But you knew that.
I'd then suss out how much house removers pay for queenslanders and spend the next 2.5 years doing as much as possible of the development applications etc yourselves to maximise your profit when you line up a buyer who wants a development. You've got a good lead time, an excellently positioned property, and you'll save money by not doing anything to the house.
posted by Kerasia at 3:09 PM on April 8, 2010
This thread is closed to new comments.
posted by sexyrobot at 5:56 PM on April 7, 2010