It takes just a few months to go from dilapidated ruin to multimillion-dollar designer abode on The Block.
But for real-life renovations, the go-to-whoa timeframe is likely to be a whole lot longer and the obstacles sometimes insurmountable.
Domain spoke to a broker, a former Block contestant and a builder to get the low-down on renovating an uninhabitable house.
Can I get finance?
The challenges of taking on a rundown property kick off at the beginning of your journey, when you’re looking for a lender to finance your property purchase and build.
“Properties that look like they’ve been hit by a cyclone are terrible for banks,” says Home Loan Experts managing director Otto Dargan. “They don’t care how much money you will make from renovating, they care how much risk they’re taking and a rundown property is hard to sell.”
Dargan says if you’re doing a major rebuild, you’ll need council-approved plans and a licensed builder in order to have your loan approved.
“Banks don’t like to finance work that you’re doing yourself unless you already have a lot of equity in your property,” he explains. “Sorry to all you DIY people who have been watching The Block!”
With a contract builder in place, you may be able to borrow up to 95 per cent of the purchase price plus the cost of the renovations. Licensed builders are required to carry home warranty insurance which reduces the bank’s level of risk.
Some lenders may approve a loan against the land value at a reduced loan-to-value ratio.
Will I be allowed to build my dream home?
Before you throw money at your chosen dump, you need to make sure your dream reno will get the stamp of approval from council, especially given that many uninhabitable homes come with heritage protection of some kind.
“I’ve been down this path myself 100 times,” says Esplin Building Group owner Nick Esplin. “I have put offers in and then couldn’t get a DA through council.”
To avoid being trapped with a property you can’t do up or demolish, Brisbane-based Esplin suggests making your sales contract subject to DA approval with a longer settlement. This will give you time to do your due diligence on what you can and can’t do with the property in question.
How much will my renovation cost?
A contingency fund is useful for any build project, but when it comes to allocating a budget for an uninhabitable house it becomes critical.
“The hardest part for us is estimating the costs at the start of a job,” says Esplin. “You don’t know the extent of the problems with the existing house until you unravel it.”
Esplin says common issues to look out for include termite damage, asbestos, the levels of the house and the condition of concrete posts and footings.
“There might be more damage than meets the eye,” he says. “If it looks run down and old then you do need to be prepared.”
Esplin had to allow for plenty of unknowns when he bought a “renovator’s delight” in Stafford after the vendor accepted his low-ball offer.
“When we inspected the property we weren’t allowed into the bathroom under government safety laws because the joists in the floor had completely gone,” he says. “And someone had stolen all the copper pipes, so there was no water.”
Esplin says you can either maintain a generous contingency fund or put provisional sums into build costings to cover expenses that can’t be easily determined upfront.
How do I avoid overcapitalising?
The Block 2017 star and serial renovator Georgia Caceres loves high-end detail, but says it will only pay dividends if you’re catering to the right demographic.
The Perth local, who together with husband Ronnie tackled one of five run-down Elsternwick weatherboards in The Block’s 13th season, says you should identify your likely buyer in the initial planning stages of your build.
“When you’re renovating for profit you’ve really got to pinpoint your demographic and make sure your layout plans are suitable for that client,” she says.
“Research the area, looking at comparable properties, what they sell for and who buys them. There’s always going to be a maximum price in the suburb so you don’t want to over-capitalise.”
If you’re renovating to sell, it’s important to take a level-headed business approach to the project.
“If it’s your forever home, go ahead [and overspend], you’ll be there for 20 years and the market will pick up and you’ll make your money back down the track,” says Caceres.
“But if you’re investing, then you need to remove all the emotion. I’m quite passionate and I can get quite emotionally attached to a property and that’s where Ron is good because he’ll offer a quick reality check.”
Who should I consult before starting my project?
The Caceres’ prefer to work within the boundaries of the suburbs they know well, north of the Swan River.
“We’ve got relationships with the real estate agents, we know all the local shops – it’s our safety zone,” Caceres says.
“For those entering a new suburb, you need to go to home opens, chat to agents, be on Domain all the time researching property and looking at sales history.”
Esplin says a good town planner and a good architect can save a lot of headaches when it comes to renovating an uninhabitable house.
“Good foundations are the key to any build,” he says. “An architect can bring good clear plans and fantastic ideas to the table and a private certifier can lodge with council on behalf of the client to guarantee compliance.”
Should I live on-site while I renovate?
The Caceres are currently renovating their own 100-year-old weatherboard house and Georgia says living in while renovating equals short-term inconvenience.
“I make a decision to surrender to the chaos,” she says. “There’s dust everywhere all the time and that’s OK.”
Weather can be difficult to predict but Caceres says avoiding winter is a good start.
“Try and choose the seasons in which you’re renovating – [for example] it’s crazy to be doing it in the middle of winter in Melbourne,” she says.
Schedule wet areas one at a time so you’re not completely without utilities and be prepared to eat takeaway food.
“Uber Eats is your friend!” says Caceres.