Author Topic: Over-capitalised houses  (Read 1730 times)

Shykiwi

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  • Location: New Zealand
Over-capitalised houses
« on: April 19, 2014, 10:36:30 PM »
Hi, this is my third posting.

I am researching buying a house to live in here in New Zealand, and we are hoping to find a house that needs renovating.  If
I find a suburb where all the houses have already been renovated, how do I work out whether one is a good deal? 

Normally I would find an unrenovated house in the same area, compare the prices, and work out if we could do that amount of
renovating for the difference.  If not, it would be worth buying.  But I feel I can't do this with no basis for comparison.

Keen to hear your experience/opinion.




JT

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Re: Over-capitalised houses
« Reply #1 on: April 20, 2014, 03:59:51 AM »
Hi ShyKiwi

To your first question, if you find out what the typical price is for the sort of house you're looking for, in the suburb you're looking at - that's point A.

If you find a house that needs renovating, just add up the cost of all the work and deduct this from point A price.

This comparison should let you know if you'll be able to do the renovation without over capitalising.

Another way to do it is use QV stats to see what houses are selling for above/below their CV.

This is another way you can tell if the house you're getting is a bargain.

I'm not sure where in NZ you are, but Auckland is in a boom at the moment, there's lots of new builds going up and even houses that need renovating are getting good dollars.

Hope this helps.

Annamal

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Re: Over-capitalised houses
« Reply #2 on: April 20, 2014, 04:05:15 PM »
Hi Shykiwi, it kind of depends what market you are buying into.

Auckland and Christchurch are very different from the rest of the country (I would agree with JT that Auckland's in a boom).

I would also look into what kind of renovation you are legally allowed to do yourselves (unless one of you is qualified or you know someone who would be willing to sign off on your efforts).

The other thing to look into is proper building inspections (finding asbestos in the ceiling, meth on the walls or dux quest plumbing could really ruin your year) and LIM reports (flood zones and liquefaction are high in everyone's mind at the moment).