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Advantages of buying a renovated unit

Posted in Starting Property Investing

My first apartment in Penang was a renovated unit. The first owner stayed there for a few years and sold it so that he could stay in the upper floor of his new shop-house instead. The shop-house was just outside the apartment. I think it is a clever move on his part. As for me, I spent only an extra RM10,000 for minor touch-ups. My first condo in Kelana Jaya was also a renovated unit. The real estate negotiator told me that the owner was moving to somewhere more upscale. I spent only money on cleaning up the unit. Both were secondary units bought from the market. When we look at buying some units to be rented out, I would prefer a renovated one. Renovated units would beat empty units anytime, hands down. EXCEPT if the renovation is really extremely ugly and it would take a lot of money to tear everything down before ‘re-renovating’. Here are advantages of a renovated unit if one is not too picky. Not applicable to everyone, okay.

SAVINGs ($$$) . Except for built-in closets or kitchen cabinets which are falling apart, there is really no need to redo these which could easily cost RM10,000 each. As you may know, those electrical cooker and hob, once installed is usually there for the next buyer too. This is another RM2,000 or more for a new one. Depending on the brand, the price can easily double. Many times, the curtain railing is already done and we may just have to order new curtains or if the current one is still new, then have it washed! New curtains for the whole house may be another RM3,000 or more depending on where you buy. The railings are usually a few hundred ringgit, still a very good savings! 

SAVINGs (TIME). It may take 1 month for renovations but that’s not the main issue. The main issue is the time(s) that you want to drop by and see the progress. By the way, this is assuming you found a good contractor to help you. As for the renovation, you are worried that it may not be what you wanted. The contractor may call you and ask you to drop by to discuss some matters. All these would take a lot of your productive time that you could have used elsewhere. Playing squash with your kids for example. By the way, the seller would usually NOT allow you to start the renovations before everything is completed. On the other hand, it may NOT be wise to start renovating unless all the documentations are fully completed and you have got the keys officially.

There are certainly disadvantages though. For example, paying ‘higher’ for a renovated unit. I say higher because when compared to non-renovated empty units, the prices are higher. Well, up to 10 percent higher anyway. However, the SAVINGs (Time + Money) above would be more than the slightly higher price paid. Always remember that even if we have spent RM100,000 in renovation, it does not mean that the selling price can be up by RM100,000. The buyer may not like our taste for example. The buyer may want to renovate the unit to his taste for example. Imagine if we are the buyer and there are 3 units. One empty unit for RM500,000, one partially renovated for RM520,000 and a renovated unit for RM580,000 what are the chances that the buyer would take the renovated unit? I think it is highly unlikely unless the owner is willing to give a discount and well, suffer some ‘losses’ from his renovation costs.

What if you really and totally dislike the renovations? Move on to the next unit lah. Surely it’s better to buy an empty unit then. If you want to renovate the unit to your highest satisfaction, its best to get an empty unit and start everything from scratch. Depending on how you do it, it’s really possible to reduce the overall expenses to a minimum. Time and effort must still be spent though unless we have a contractor who knows our wants and needs very well.  Happy buying a renovated unit or if you are getting an empty unit, then happy renovating

written on 12 Feb 2018

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