Reno Unit or House?

Hi all,

I'm just starting out on a reno path, and don't have a ton of cash, probably looking around the 300K mark for first purchase, and would be hoping to spend an additional 20-30K on a cosmetic reno and on-sell at 390 ish.

I'm living in Sydney and working full time so reno would be a weekend and evening thing. Which means I'm limited as to how far I can travel (Newcastle would be the outer limit and probably only if the numbers REALLY stacked up...)

I've been primarily interested in Houses for reno, but given my limited funds I'm wondering what the go is with unit reno's? Does anyone do them as a regular thing? Are there issues with strata etc...?

Any advice greatly appreciated.
 
IMO buy, reno, sell is VERY difficult to make money out of.

Your Example:
Buy @ $300K
Reno @ $30K
Stamp Duty $9K
Legals $1K
Holding costs (4 months) $5K
Total costs = $345K

Then sell @ $390K (if you can)

REA comms @ 2.2% $8.5K
Legals $1K
Discharge fees etc $1.5K
Total selling costs = $11K

Profit before tax = $34K
Assume you do this for a living so no GCT but PAYG tax instead so tax @ 30c in the $
After tax profit = $20K :eek:

Now this $20K profit will evaporate if you run over time on your reno, or you cannot sell for $390K ish, etc

That is why most seasoned investors would do a buy, reno, hold and refinance some of created equity out, tax free. You'd get $20K out no problem to use for whatever you like (or as a part deposit on your next one).
 
Personally I would go for a unit, no roof or gardens to worry about, but the unit would have toi be in a presentable block with street appeal to start with.

With units you can get more bang for your buck, but I also agree with everything above. I did nicely out of a unit reno, but refinanced instead of selling.
 
In that price range I would be looking at a Sydney unit as well. Having said that I do have clients buying outer Newcastle 4br houses for under 300k with lots or 'potential'. I have done a few units in Syd ( and Houses). Units for a first timer are easier and quicker to complete however as with the other advice you have had here I would consider trying to hold the property and not flip it if you can.

Hope this helps
Jane
 
Personally I would go for a unit, no roof or gardens to worry about, but the unit would have to be in a presentable block with street appeal to start with.

With units you can get more bang for your buck, but I also agree with everything above. I did nicely out of a unit reno, but refinanced instead of selling.

I did likewise with a 2 BR unit (villa)
Pulled $56k cash take out out in a post reno loan top up.
30 days and approx $10k reno budget.
New kitchen - 2 pack with granite benchtops (that was the "wow" fatcor)
New floor covering throughout, window treatments etc
Fully painted top to bottom (that was my only labour input)
New vanity and mirror in bathroom created the illusion that the bathroom had been fully renovated.
New door handles and lights add some style for little cost.
Units can be a good place to learn the art of reno.
 
I just want to clarify something Propertunity said.

If you refinance and withdraw equity it isnt tax free - but more accurately tax deferred. you will evantually have to pay tax on that money you take out and use elsewhere.
 
Thanks everyone, I was originally looking at refinancing instead of flipping but had been talked into flipping, it's interesting (and valuable) to hear what you all think! Might start looking at units closer to home then! :)
 
Actually looking at my first post I should have been more specific, this will be my first prop and PPOR, so I'm informed by my accountant that stamp duty goes away, and if I live in it for 6 months so does CGT.

Neverthless, I do want to pursue this as a strategy, not just a once-off so will def take on board your recommendations!
 
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