Apartment with renovation or "after builders": which is more profitable to buy today
Kyiv • UNN
Buying an apartment with renovation or "after builders" depends on the purpose: for yourself or for rent. A finished apartment is beneficial for investors, and without renovation – for those who want to do everything to their taste.
When buying an apartment, it is important to consider whether you are looking for housing for yourself or planning to earn money from this property. A ready-made renovation in a home can be both an advantage and an unnecessary expense - it all depends on your goals and resources.
UNN spoke with a realtor, real estate expert and AFNC member Eduard Brazas to find out when it is worth taking housing "after builders" and when it is more profitable to buy an apartment with a finished finish.
Buying an apartment with or without renovation
The expert notes that when choosing an apartment with or without renovation, it is important to decide whether you are buying real estate for yourself or as an investment and plan, for example, to rent out housing. The advantages and disadvantages will depend on this.
If you buy an apartment for your own residence, the main disadvantage of an already renovated home may be its non-compliance with your personal needs.
If you are buying for yourself, the main disadvantage of this situation is that this renovation will not be as you want it, but as it is. There may be sockets located not where they should be, equipment that is not what you want, and so on. That is, this may not correspond to your wishes regarding the home in which you would like to live. This is the main disadvantage
Another practical difficulty is added to this - the organization of repairs.
Therefore, if you do not have a team that will do this for you, or you do not know how to do it yourself, then it is not a fact that you will be able to finish the repairs quickly and efficiently. And that you will have enough money for it. Therefore, there are often situations where repairs are done for several months and so on
For an investor who plans to rent out housing immediately, a finished apartment is a profitable option.
For a situation when you, for example, bought an apartment to rent out, then spending a lot of time on repairs is losing money. And so you bought an apartment, paid the money - and the apartment is already working from the first day, if there is a renovation. Well, the same with housing. That is, you rent an apartment, wait until you do something, and so you can move in and live right tomorrow
The difference in the price of an apartment with and without renovation
At the same time, one of the main advantages of such an apartment is its cost. An apartment with a finished renovation will cost less than one made on your own.
If we are talking about advantages, then this is definitely the price issue. Even if someone has done a renovation there, he is unlikely to be able to sell it much more expensive than the market price. And the market price does not take into account the cost of repairs by 100%. Because it is quite expensive to do repairs now. And the main thing is that there are no people who will do these repairs
He notes that "it is much cheaper not to buy an apartment without renovation".
According to Brazas, even if the renovation costs you $500 per meter, which is almost impossible in the current time (the average price in Kyiv, according to him, is 1000-1200 per meter in a new building), then it is unlikely that an apartment without renovation will be sold at a price of $500 per meter less than housing with renovation, so that, taking into account the cost of work, you "break even".
Is it worth buying an apartment without renovation
Only if you have the opportunity to do repairs quickly and cheaply. Suppose you are a builder yourself, you have acquaintances who are builders who can do something. That is, if you have people and resources for this, then maybe you can do the repairs yourself, and it will be more profitable
He notes that at the current prices for materials and work, the price of renovation "after builders" per square meter in a new building will cost approximately one thousand dollars, which may amount to the cost of another apartment.
According to the realtor, if "renovations are your business, then you can earn money on it" if you plan to invest in real estate. But in today's market, this requires flexibility and a clear understanding of your capabilities.
If you can do renovations in batches, because everything is prepared, then it is even more profitable to enter an object after builders with some discount. Quickly make a very economical renovation for minimal money, put Epicenter furniture there and already receive your income
For novice investors, according to him, the strategy should be different.
If we are talking about the fact that you have this first, second investment, you do not have these opportunities to do everything quickly, then it makes sense for you to pay attention to objects that, for example, have the potential for price growth
An attractive option in this case may be apartments in buildings that have already been built, but have not yet been put into operation: cosmetic repairs have been done, documents are in the final stage, and the price is still lower than the market price.
This allows you to both earn money and increase the value of the object by completing the formalities.
The building has not yet been commissioned and communications have not yet been officially connected, but a person has already made some inexpensive cosmetic repairs there and is selling it. Then you can just buy such objects there, quickly buy some furniture there, immediately settle tenants, receive your income directly from almost the first day of operation, and then deal with documents there or something like that. And accordingly, your object there is growing in price somewhere
"In addition to the fact that you receive income, it also grows investment-wise, because you received documents, received connections, something else there, concluded contracts with utilities. Well, that is, there are such objects, you can look for them on the market, find them somewhere," he adds.
However, the expert emphasizes that due to mobilization, labor shortages and the high cost of building materials, investing in unfinished objects carries serious risks.
When I talk about unfinished houses, I'm talking about unfinished ones that are already standing and we're talking about the fact that there is no commissioning yet, there are no documents that the builder is getting
"That is, the developer has an inflow of cash and he will definitely close this construction at least documentarily, because there is nothing physically to do there, there are only questions about communications and documents. That is, we are talking about just such cases. I would not risk investing at the foundation level now and I would not advise my clients either," the expert emphasizes.
He notes that in 2022, almost 100% of construction projects were frozen, which gives an understanding of what to expect in the event of a deterioration in the situation in the country.
The way they froze almost, well, practically 100% of all construction projects in 2022 clearly shows us how they will act in the event that the situation worsens again. Therefore, we understand that no one will finish anything, they will throw it away and leave it, and that's it. And no one will return your money
The safest thing to invest in now is those objects that are already ready or in the final stages of completion.
"We invest only in what is either already built, or is about to receive documents. Then yes, then it is possible and it makes sense," the expert adds.
Is it worth doing repairs before selling an apartment
The question of the advisability of repairs before selling an apartment always depends on its condition. The expert explains that it is worth approaching this individually, assessing the real appearance and needs of the object.
"Here you need to understand, if you have, say, a dilapidated apartment, where you need to do a major renovation, then most likely, you should not invest in it, because the reasons are the same as after the builders," he notes.
However, if we are only talking about eliminating minor defects, the situation changes.
If the apartment needs light cosmetics, somewhere the tile has fallen off, somewhere the door is scratched, something else, then I would always recommend doing such cosmetics. Because this may not increase the price directly by several times, but it 100% increases the liquidity of the apartment. A person came, saw that everything is neat, everything works. All the light bulbs are working, the smell is pleasant, he will buy such an object sooner than an object that requires some investment"
At the same time, the key factors remain:
- the buyer's impression during the inspection of the home;
- the desire to “move in – and live”, which is inherent in most potential buyers.
The desire to move into a finished object and do nothing, even if in reality you have to redo something later, but this is not visible when viewing it, then this desire will encourage you to conclude a deal there
He also notes that if you can get by with just a good cleaning, twist all the light bulbs and eliminate the shortcomings - this may also be enough.
