FIRE-damaged homes have become the real “hot” property buy for a growing number of house hunters.
Buyers have been snapping up the properties, complete with soot-stained walls and charred timbers, in a desperate bid to get into Sydney’s trendy suburbs at a bargain because these damaged homes sell at below-average prices and can often be renovated at minimal cost.
For instance, a three-bedroom house in Willoughby North, listed months after a fire made it uninhabitable, sold for $1.32 million, about $500,000 under the suburb average.
A sooty terrace on Little Riley St in inner city Surry Hills sold for $911,000, again more than half a million under the average, while a freestanding brick home in St Peters with a burnt-out ceiling changed hands for $790,000, compared to the usual suburb average price of $1.1 million.
Each of the homes attracted multiple groups of interested buyers and sold at auction in front of packed-out crowds.
South Coast resident Michael Perry recently purchased a fire-damaged home in Busby, near Liverpool, and said he had to compete with numerous other interested buyers.
Mr Perry and wife Bianca, along with friend Jamie Williams, put in a pre-auction offer of $440,500 in April and admitted they were lucky it was accepted.
“The agent copped a lot of abuse from other interested parties when we bought it because there was so much interest in the property,” Mr Perry said.
“We had been looking for a home like this for some time. We knew we’d have to get in ahead of the auction if we wanted to buy it.”
The friends worked weekends to fix the home up and have put it back onto the market for about $550,000 with Richardson & Wrench Hinchinbrook/Hoxton Park’s Phil Norman.
Mr Norman said the trio “added a lot of value” to the home at 24 Guernsey St and it is now one of the best-looking properties in the area.
However, if you bid rashly, you could end up burning through your cash and see those dreamt-of profits go up in smoke.
Buyer’s agent Chris Gray said TV renovation shows popularised the idea of flipping “ugly duckling houses”, but inexperienced renovators were paying too much for the properties. “Too many people are getting carried away,” Mr Gray said.
“They’re renovating based on emotion when they should be basing their decisions on a spreadsheet.”
Binvested founder Nathan Birch has given numerous fire-damaged homes the phoenix treatment, making profits of more than $100,000, but said it is a risky strategy. Some singed homes are too damaged to renovate for a profit and even when fixed may only be worth slightly more.
They only make sense as investments when the fire damage has not affected the roof cavity, he said.
Article by Aidan Devine | The Daily Telegraph | 17 July 2016
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