When looking for a deal on a new house many real estate agents would agree that investing in a property that needs renovating is a good idea. However, according to Selling Sunset’s Jason Oppenheim's property advice, your money would be better invested in a finished home.
See: Renovation ideas – 9 dream home remodelling projects to inspire you in 2021
Netflix’s Selling Sunset became a surprising source of expert real estate advice over the summer. The reality TV show focuses around the Oppenheim brokerage in Los Angeles, founded by broker Jason Oppenheim and his twin brother Brett Oppenheim, which handles some of the world's best homes.
While several of the storylines focused around properties Jason helped to develop and remodel, surprisingly the real estate broker doesn’t recommend investing in a renovation project. ‘I have become much more of a believer that you should get a finished product for a lot of different reasons,’ he said in an interview with The Express.
‘When the market was booming, I think it was one thing to buy a property and to add value through a remodel but remodels have become more expensive just overall, materials, labour, everything. And I think the chasm between cost that it would be for just a normal person to do versus the cost it would take for the developer who is in this business to do the remodel, that has grown,’ he explains.
‘So I tell my clients to leave it to the developer, they can do it at a much lower cost than you. Why? Because there is such a narrow profit margin right now in terms of doing remodels.’
That’s not to say you can’t make a profit by renovating a house. In fact many real estate agents would still recommend investing in a fixer-upper property.
Cliff Smith from The Agency, a Luxury Real Estate Brokerage, explains that choosing between a turn-key or a renovation project will always depend on the buyer. However, the current property shortage across the country has made turn-key properties more valuable, and expensive commodities.
‘From a broad perspective, based on the current unique market we are in, I personally would look to get a deal on a fixer-upper and add value over time through quality improvement,’ he advises. ‘Turn-key homes in this market are commanding a premium and you'll have to expect to potentially overpay for that.’
Financially a fixer-upper might help your money to go further when investing in a property upfront. It could even help you turn a profit if you include one of these 13 best ways to add value to your home. However, Jason also warns about the hidden costs and stress of renovating.
‘Why spend six months of your life, maybe living somewhere else or living through the remodel, having to argue and deal with hundreds of decisions and stress, it would probably make no money,’ he told The Express.
Jason’s advice is even more relevant as the U.S. Chamber of Commerce Commercial Construction Index reported in December that most contractors are facing a shortage of materials as a result of the pandemic. The shortage could turn your light remodel into a really big headache.
When choosing your home be realistic with yourself about whether you really can commit to a renovation project. As Jason says sometimes it’s best to leave it to the developers.
See: These are the two rooms to spend your budget on – if you want to increase the value of your home
‘I just tell people 'let the people who know how to do that do it. It'd be like buying a meal that's not quite cooked, you're not the chef, let the chef finish the meal and you get the perfect meal.’
Is there a season 4 of Selling Sunset?
Selling Sunset has been renewed for a fourth and fifth season. The fourth season is expected to return to Netflix in late 2021 or early 2022, so you will have to wait a little longer to browse some of LA's most luxurious homes again.
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