By Natalie Belovic
If you are in the market to buy a property whether it be a condo or a single or semi detached, finding one where you can add value by doing upgrades will give you the best investment return possible and add value to your real estate right away.
Mostly all buyers like something that is “move in” so the sad and tired properties in need of love usually sell for much less than the costs of bringing them up to date. If you can find something and add value, you’ll recoup your investment and more right away.
The biggest bonus to undertaking this kind of work is that you get to pick and choose all the finishes yourself and get a product that you can love. Moreover, buying an older condo means you get a whole lot more space to live in once the work is done.
As a clear example of this formula, I recently sold a property where the seller had received an “as is” offer of 560K prior to the property hitting the market, they spent 30K and sold it for 670K. Some elbow grease, paint, floor sanding and new flooring made this huge of an impact.
So, in scenario 1, you are renting, can buy the property and carry it for a few months while you undergo the work needed. If you negotiate a longer closing, that gives you loads of time have access, plan and find good contractors to do the work so that the time where you are paying both rent and mortgage is limited.
In scenario 2, you already own, need to sell and want to buy something that needs some work. Again, if you can swing carrying both properties for a period of time, this is optimal as it would require only 1 move. Once again, get a long closing on your end so you have lots of time. As far as financing, banks will always be happy to provide you a “bridging” loan if you have sold yours but are buying before you get your cash. That is never a problem.
Where it’s important is if you are buying and have not yet sold, then, you must qualify to carry the mortgage on your current place AND the entire value of the new purchase on your current income. What is find is that most buyers are quite conservative here in Ottawa and mostly always buy well below the amount banks would be happy to lend. So, although the payments might seem a bit large, as the seller-buyer, you know that it is for a short lived period of time. You do want to make sure that your current property is well priced and that your number crunching is based on “worst case” scenarios on both the buying and selling end.
In scenario 3, you are living in your property and want to undertake a renovation. The questions to ask yourself are as follows:
1) can I do this renovation with minimum disruption to my family and routine. Sometimes, if it’s an addition, almost the entire thing can get built out with disrupting your current living space. It would only be at the very end when the spaces are connected that there would be an impact.
2) How much disruption and stress am I or my partner able to cope with? If there are kids or pets involved, arrangements might be more complicated. If you need to get out, here are some solutions:
If it’s a summer reno, why not rent a cottage nearby and make that home base during the construction. We are so blessed with cottage country that is within daily commuting distance, that’s a great option. Airbnb’s are also a great source of long term rentals. Perhaps you have a neighbour that is away at their cottage or on vacation…. Neighbourhood e-mailing lists are a fabulous source of short term accommodation offering and requesting…
If it’s a winter reno, then “Snowbirds” are a great source of short term housing. Mostly absent owners would be delighted to have someone watching over their homes while they are gone. You’ll need to either store your belongings in your basement or, rent a storage unit for the duration if you must move things out. Most storage places don’t require long term contracts. Many supply the moving van with the first drop off.
It may seem daunting but with the help of great professionals to help you plan, design, find you alternative accommodations, you can achieve your renovation dreams with not as much anxiety and stress as you might believe and end up with a top-notch product at the end.
Natalie Belovic is a broker with the Urban Ottawa Team, part of RE/MAX Hallmark Realty Group, brokerage.