I am wanting to investigate purchasing badly damaged houses ... to buy cheap, knock them down and rebuild...
G'Day Daniel
As Rolf said, be prepared to pay cash
However, I bought an eighty year old house twelve months ago which was in a very sad way
I had hoped to have plans ready for the new house when I lodged the application for finance, but alak was nowhere near having any plans at all, but I made sure that I was very clear in the Broker Notes that the house was not going to be renovated, but sent to Wonthaggi - or down the tip - and that I regarded what I had bought as vacant land
The Valuer, apparently, chortled away quite happily at the state of the place but stopped chortling long enough to put a Credit Caution in the Report
Luckily, Head of Credit rang me to find out exactly what I was doing. The valuer had appraised the 'improvements' at $16,000, so Credit deducted the $16,000 from the Contract price and would then lend to a ratio of the remainder
As I was running up against Settlement, and couldn't risk days or even weeks delays with the Mortgage Insurers thinking about it, I opted for a 60% lend - of the 'land value'.
Ouch and double ouch!
And then I couldn't get insurance because the condition of the place was so bad
However, I recently got a quote of $9,650 to demolish the house and clear the block (including removing all the concrete driveways, sheds etc) which is a lot cheaper than I thought it would cost.
So how do your find these treasures? Most damaged properties will be advertised as such.
Generally, the reason why the damaged property is sold 'as is' and not repaired is because it was not insured
But you are not necessarily going to get any bargains. If the property is in a popular area, many people would think that the demolition job is already half done and that they are not going to get any ojections to removing the house.
That doesn't necessarily mean that there are not going to be objections if you want to do more than replace what was previously there
Sometimes, the 'dated but good condition' places are cheaper than the 'never seen a spanner in it's life' properties - as they can appear to be 'too good' to demolish, if only someone would spend a squillion dollars doing them up
When I did the reno / dual occ, believe me, never again. If demolition costs less than $10,000 it's quicker, cleaner and easier to bring in the bulldozers and start again.
Just make sure you are well and truly cashed up before you start looking. Something needing a new bathroom is one thing, something needing a bulldozer is remarkably hard to finance.
cheers
Kristine
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