Meet the Owners and the Home

We missed our friends and family…. and the mountain-bike tracks! We still visited a lot, and really loved the direction in which the city was regenerating. We wanted to buy back in and continue our life in Christchurch.

We wanted to be close to the hills so we could get out mountain biking as often as we can, but close to the city centre too, to be near work. A lot of our friends live around the foothills, and we wanted to be near them. This narrowed our search area to a few key suburbs.

There were few new builds or empty sections in our preferred suburbs within our budget, and the housing stock was mostly earthquake affected. So we knew quite early on that we would probably be looking at a renovation project.

We looked at a few renovated properties, but the quality of work was really variable. A lot of what we call ‘as is where is’ homes, had been purchased by people keen to make a quick buck by undertaking shoddy repairs and flicking it on for a profit. (“as is where is” homes are homes where the owners had been paid out an insurance settlement and moved on, selling the house as it sits – often uninsured.)

We ended up concentrating on south Hoon Hay. We loved the area, and the houses were slightly more affordable than other homes only a few streets over. We felt like it was on the up.

There was a friendly vibe, and the neighbourhood was really tidy. It felt, given the timing of the original subdivision, that the area was slowly transitioning over to younger families and we were only too keen to be a part of that. The housing stock was generally pretty good there also, and on budget.

We were wary of sub-standard repairs, so preferred a house that hadn’t been repaired yet. It also had to be insured – for us to be able to secure a mortgage. With that in mind, we made meticulous pre-purchase inspections before making any offers.

We probably were looking more with our heads than our hearts from everything that we’d learned post-earthquake. Ultimately, we had to feel inspired that we could take the house in consideration to where it needed to be, within budget.

The cheaper the property was, the more we would need to spend on the home renovation, but with that came a catch. We didn’t want to buy cheap, to then spend more than we had to make it livable. It was a balancing act to find the perfect place.

Our ideal budget was around $500,000. For the perfect house we were happy to stretch that up to $550,000.

When we had been looking across multiple suburbs (before we settled on our buy-to-renovate plan), we found that for that budget we could only get a dilapidated house in what would be described as a “desirable” area. The problem with that was, we wouldn’t have anything left over to create a quality living environment. The houses we looked at were cold, damp and tired – and we didn’t want to live in that kind of space.

We shifted our focus to some only slightly more affordable areas, and a few trends emerged:

• Renovated houses were generally demanding much higher prices, regardless of the quality of renovation.
• Sunny, warm, well done renovations were scarce, and also very popular, and we felt were selling for more than the cost of the home and renovation, even if they’d been lived in for several years.

The buy-to-renovate route was the natural conclusion. Carefully buying a dilapidated house in a more affordable area would offer us a fantastic home, and if we budgeted carefully we wouldn’t be over-capitalised.

The key questions were:

1. What houses were out there and how much were the vendors asking for?
2. How much would we need to spend to bring it up to the standard we desired?

Of course the answers to these questions were variable. We invested our time in both hunting houses and researching renovation costs.

Ultimately, the purchase price on the house we settled on was $447,000. We believed the maximum a buyer in this area would be willing to pay up to $550,000 for the “perfect” home. After we discussed our plans with the bank off the back of our research, we set a budget of $75,000 for the renovation and a total price of $522,000.

Purchase price: $447,000
Renovation budget: $75,000
Total cost: $522,000
Realistic home value after renovation: $520,000 – $550,000

This house was the fifth home we made an offer on. We had made unsuccessful offers on two other homes. We went to two auctions and actually won one, but we did not meet the reserve, so we had to say goodbye to that too.

We knew from our previous experiences that moving quickly to secure the house was essential. Within days of listing, we had arranged with the vendor to conduct a pre-purchase inspection. As the house is over 50 years old, we enlisted the help of a trusted builder, experienced in working on houses of this type and era.

We were especially careful to inspect for rot, borer, old and existing plumbing leaks, moisture issues and asbestos. Once we established the property had good bones we put in an offer.

Admittedly, what we settled on isn’t much to look at! But that worked to our advantage. We had no trouble finding the vision, and the house wasn’t wildly popular in the condition it was in.

We based our offer on what we considered to be the value, using our knowledge of the area and what the maximum value of the home might be after the renovation was complete.

We secured the home shortly after.

There was a LOT of work to be done, but nothing that required significant structural changes. The orientation of the house was good, the layout was good, and the large detached office was a real bonus. It was soundly built, with big eaves, brick cladding, plumb walls and a level floor – and only limited cosmetic earthquake damage. The bathroom and toilet had had some work done, but it had been completed to a pretty poor standard, so wasn’t really a big plus, but better than nothing. Apart from that, the fireplace, and the flooring (which was well worn) it was more or less 1960’s original. It was exactly what we were looking for.

We totally beleived we could achieve the vision, though admittedly, we were feeling very nervous! – along with the excitement of undertaking such an extensive renovation.