Is the investment worthwhile?
Buying a house in need of renovation, carrying out the necessary work yourself and thus saving money – this is the dream of many property buyers. With the right planning, this project is quite promising, but there are a few aspects to consider when buying a property in need of renovation. If you know what to look out for, you have lucrative opportunities to design your dream home yourself or achieve a high return on resale.
Renovation or refurbishment: which is which?
The terms refurbishment and renovation are often used interchangeably. However, there are some fundamental differences between the two measures. Properties in need of renovation are characterized by the fact that their substance is basically still in good condition. For example, the walls, sanitary facilities or flooring of such properties need to be renovated. Renovation therefore refers to the superficial upgrading of a house or apartment to restore it to its optimum condition. The costs are correspondingly lower. A home in need of renovation requires significantly more work, as its substance is no longer in good order. This can mean that windows or the roof are outdated, sanitary facilities or pipes need to be replaced or the electrics need replacing. If refurbishment is required, there are glaring defects that need to be rectified.
Before buying: weigh up the pros and cons
The main advantage of buying properties in need of renovation is that you save money, as they are available for a lower price than properties in perfect condition. Especially if the apartment or house is in a prime location, buying a property that needs work can be lucrative. If you are a handyman yourself and have good contacts, you can save a lot of money here. You can also influence the condition of the property yourself, as you are responsible for key decisions – such as the type of sanitary facilities. However, it is advisable to take a close look when buying apartments or houses in need of renovation. Many sellers include the savings from the need for renovation or refurbishment in the price. However, it is not always feasible to calculate all renovation work precisely in advance. Particularly in the case of old buildings, you may be faced with high costs if they need to be upgraded in terms of energy efficiency. It is best to consult an expert before buying, who will take a close look at the property and give their opinion on the likely work and costs involved. This gives you the opportunity to compare costs and returns.
For whom is the purchase particularly worthwhile?
Buying an apartment in need of renovation is generally worthwhile if the advantages outweigh the disadvantages. The opinion of a surveyor is essential in order to thoroughly check the condition of the property. It should also be ensured that the necessary work on the property can be covered by the calculated costs. To this end, it makes sense to obtain binding commitments from the relevant trades in order to draw up a schedule for the work. The more renovation or refurbishment work you can carry out yourself, the cheaper the end result will be. You should also check whether state subsidies are available for the renovation. In particular, ecological measures that increase energy efficiency are often supported.
Buy cheaply with renovation loans
There is the option of obtaining a renovation loan from the bank or credit institution for work on a property that is to be renovated. In principle, this is a regular installment loan that is granted for a specific purpose. This means that the loan amount may only be used for expenses related to the renovation. The advantage of such a loan is its low interest rate. It is therefore cheaper than a regular installment loan, which reduces your incidental purchase costs when buying a house. To apply for it, you only need to prove that you own the property.
Value-reducing factors are signs of wear and tear caused by occupancy and wear and tear. The amount of depreciation of buildings is also known as the age discount. This increases with the age of the property. The location or changes to the location can also have a value-reducing effect, for example if groundwater contamination occurs due to a nearby factory or moisture damage occurs due to flooding.
Properties in need of renovation can be found through an estate agent or on relevant internet platforms. They are usually marked accordingly.
A refurbishment is generally more expensive than a renovation, as the basic fabric of the property must be taken into account. This is worthwhile if a cost calculation prepared in advance shows that the increase in value of the property is significantly higher than the cost of the work. It is not only the work itself that needs to be taken into account here, but also aspects such as the location of the apartment or house. Ideally, as much of the work on the apartment in need of renovation as possible should be carried out independently or at lower prices thanks to good contacts.
Renovation is required if there are signs of heavy wear and tear, but the building fabric is still in a proper condition. Necessary renovations can include work on walls (e.g. wallpapering or painting), floor coverings or sanitary facilities.
If you want to buy a condominium in need of renovation, you should get a comprehensive overview of the property beforehand. Take your time and inspect the property carefully, preferably together with an expert. Also check the location, as this is a decisive factor for success. All essential documents should be available before you buy. This includes a building permit. If this is not available, the building should at least be eligible for approval, but in this case the costs for the approval procedure must be included in the calculation.
