Flipping fixer-uppers in sought-after suburbs was once a surefire way to make money in real estate, but with construction and borrowing costs so high, those numbers don't add up anymore.
Houses that are no longer habitable can become popular properties, with dozens of bidders trying to acquire the property for a little more than the land price, or renovating it and relisting it to make a quick buck. People also gather here.
One renovator hoping her efforts will pay off is Melbourne homeowner Hannah Browning Breeze, who is selling a renovated four-bedroom terrace at 438 Lygon Street, Carlton. .
She, along with her partner Matt, sister Miranda and partner Sam, bought the once-rundown property in 2021 for $1.455 million and spent the next two years converting it into a luxury family home.
“Sam and Miranda originally had the idea of selling the property,” Browning-Brees said. “They were the first people to experience it, fall in love with it and understand its potential.”
Hannah Browning Brees and her partner Matt bought a dilapidated fixer-upper in 2021. Photo: Provided
The house, which had functioned as a shared house for 40 years, was in dire need of some TLC.
“There were four college students living there,” she said. “The windows were broken and there was grass growing on the floor. I didn't want to touch the railing coming in.”
The plan was to retain the existing facade and as many original features as possible, and add a modern two-storey extension with open-plan living to the rear.
After the fact: This property is unrecognizable with a brand new interior. Photo: realestate.com.au/buy
The project took more than two years to complete, half of which was spent approving renovation plans.
“It was Congress that dragged it out a little bit,” Ms. Browning-Breese said. “It would have taken more than a year if we had gone back and forth.”
Before: The shared house in Carlton needed extensive renovation. Photo: realestate.com.au/ sold
After: Co-owners Miranda and Sam outside their newly renovated home. Photo: realestate.com.au/buy
This project was the couple's first renovation project, and although Matt is a carpenter by trade and Sam is an engineer, they had the know-how to handle large-scale projects, but they decided to outsource most of the work.
“We did a lot of demonstrations and it was pretty bad,” she said. “We found a lot of interesting things, like a big fire bell, ticket stubs and old pay slips. There are newspapers from the '50s in the barn in the back.”
Extensive renovations have transformed the dilapidated property into a modern family home. The owners hope their efforts will pay off by auction day. Photo: realestate.com.au/buy
The total cost will be “nearly $1 million,” so Browning Breeze hopes the investment will pay off by auction day, when the remodeled home will be auctioned on February 24 with an estimated price of $2.45 million to $2.55 million. are.
“I'm confident we'll be within range,” she said. “I hope it’s competitive.”
“Until it's completely completed. [the sale] It's over, but I don't know if it's worth it financially. ”
The charm of fixer upper
As housing shortages continue and prices rise again, some home seekers are turning to renovators as a way to get into desirable areas, especially as rising interest rates limit borrowing power by more than 30%. We believe we have little choice but to aim for the joy of. Average since mid-2022.
Last year's huge price increases are prompting more homeowners to put their abandoned properties on the market, some with gaping holes in the floor and a $1.4 million asking price. It also includes an abandoned Sydney home.
A collapsed Sydney house that was swallowed up by nature and literally fell down a hill was sold for $1.35 million last year, while a junk-filled storage house sold for $3.85 million.
In Brisbane, an uninhabitable house with caved-in walls and smashed windows broke an Australian record for the number of bidders registered, as throngs of people raised their paddles to snag bargains.
This broken-down Brisbane home had 161 registered bidders at auction last year. Photo: David Clark
But the construction industry is facing its toughest situation in a decade, and with construction costs and delivery times skyrocketing, rushing for profits may not turn out to be profitable right away.
Strong demand for renovated homes
Prop Track economist Anne Flaherty said rising interest rates and construction costs were increasing relative demand for newly renovated properties.
“Many of the benefits that previously allowed people to buy property at discounted prices are offset by the fact that construction costs are much higher, construction times are much longer, and interest rates are higher so they have to borrow money to buy. I plan on making further repayments,” she said.
Flaherty said the process of rebuilding a home has become increasingly difficult, more expensive and more time-consuming, making large-scale projects no longer viable for many buyers.
“It's a riskier time, especially in a market where we don't see significant price increases at the moment,” he said.
This three-bedroom Morningside home sold for $1.17 million last March after extensive renovations. That was $477,000 more than it was purchased for less than a year ago. Photo: realestate.com.au/ sold
But renovators could still offer smart buyers a way to access popular suburbs even if their budget doesn't extend to renovated homes, Flaherty said.
“For buyers looking to buy older properties that need some work or cosmetic fixes, this can be a great opportunity to buy certain areas at a discount,” she said.
“It depends on the scale of the renovation being done. Sometimes it's very small changes to the property that can really add value, like retiling or changing cabinetry.”
Lisa Parker, a buyer agent with Parker Buyer Advocates, said turnkey home prices are rising as buyers' preferences shift toward renovated properties.
“The demand for walk-in properties is very high, purely because deals are difficult to secure and renovation prices are sky-high,” she said.
“People are going to have some pretty stiff competition because there’s such a shortage of these properties on the market.”
This three-bedroom home in Hepburn Springs, Victoria, last traded in September 2021 and is currently listed for $155,000 after being largely renovated with a few tweaks to the layout to add an additional bedroom. It's back on the market. Photo: realestate.com.au/buy
Parker said large projects are especially risky for beginners who don't have a reliable trading network or renovation experience.
“It is definitely a viable strategy in this market if you have the skills and trades in hand, but I don't think it's the right time for beginners to start because they have a higher risk of incurring losses.” It’s a project,” she said.
But purchasing an uninhabitable dump with a longer term in mind has paid off for some smart homeowners willing to invest some equity.
Laura Hattin amassed considerable wealth after purchasing a Brisbane dump for below land value and converting it into a beautiful family home. Photo: Lyndon Mechielsen/Courier Mail
Laura Hattin bought the run-down 1920s Dutton Park property, said to be Brisbane's worst home, at auction for $665,000 in March 2019 and spent about $400,000 bringing it back to life. This figure does not include labor costs for herself or her father, who was a builder.
“We were able to purchase it for less than the land price. It was difficult, but yes, it paid off,” Hattin said.
“One appraisal about a year and a half ago was for $1.25 million, and another recent appraisal was a little higher than that.”
numbers game
Charles Atkins, estate agent at Jellis Craig Fitzroy, who is selling Ms Browning-Brees' Carlton flip, said young professionals such as doctors and lawyers were attracted to the property's high level of finish and spacious proportions. He said he was attracted to him.
“The market is focusing on buyers' attention to quality, renovated homes,” he says.
“There aren’t many refurbished properties of this quality offered to Carlton and the surrounding market.”
No expense has been spared in the high-quality finishes, and there is no trace of the shared house of the past. Photo: realestate.com.au/buy
Atkins said fixer-uppers can still be a viable project if the buyer secures the target property at a relatively low price and has experience.
“It's a numbers game, given what's going on with both interest rates and builder costs,” he said.
“If you know what you’re doing and you’re in that space and you have some trades behind you, it can stack up.”
In recent years, construction costs for large-scale renovations have skyrocketed. The rear of this Carlton property has been completely rebuilt from the ground up. Photo: Attached
Ms Browning Breeze said while this was a big undertaking, the highlight was seeing locals share stories about the house's past and learn about the house's iconic past.
“One of the things that really made us happy was that all the people who passed by the house said they lived in the house or went to a party at the house. Apparently a band was playing there too.
