In th e market today,the most trusted method for generating profit is by “adding value” to your property. And how do we add value?
Through renovations, of course!
Renovation, if managed correctly, is considered one of our most powerful yet conservative money making strategies
If you want to increase the value of your home or investment property, consider the following quick and easy renovation ideas to help you add immediate dollar signs to your investment value even if the market is flat!
Avoid going overboard and overcapitalising
Don’t spend money unless it will get you a return and increase the value of your property – be frugal and stick to cosmetic facelifts. Don’t renovate every wall and floor – if you can work with it leave it alone. Stick to the K.I.S.S principle. A general rough rule of thumb is that for every dollar you invest you want to get two dollars back in value and increase your rental yield at the same time.For example for a $40K renovation on a $200K property you should be able to have it valued or sell it for $280K or more .
Stick to minor renovations that will bring old places alive
Paint! paint! and more paint.
“It’s amazing how big a transformation can be achieved just by doing some good surface preparation, followed up with applying good quality paint. Stick to proven colors often used by builders which will go with absolutely everything and make your home feel light, airy and open.”
First impressions count
It doesn’t matter how good your renovation is inside if you can’t get potential purchasers through the door to actually see how it looks in there. Consider external renovations – especially if a property is tenanted. Aside from getting potential purchasers attracted, a disturbed tenant is a disturbed income; so you can be losing money and be going backwards and losing on your loan, if a property is tenanted and you decide to renovate on the interior. External renovations don’t really disturb the tenant and can also greatly increase a property’s value. Moreover! don’t forget, we all love a big nice deck or undercover BBQ terrace for a beer of an arvo – this is also a renovation winner!”
Transform the laundry
A great way to add value is to increase the facilities and amenities on offer. It can be expensive to construct an extra bedroom or living area, so look at how you can maximise the space you’ve got. For instance, if you have a large laundry try to convert it to a combined bathroom/laundry. You will add significant value by adding a shower, toilet and a cupboard with a deep sink that can be used as either a vanity or a laundry trough.
Sort out the floor coverings
You can completely transform the look and feel of a living room by addressing what’s going on under your feet. Exchange the printed carpet for floating floors. If there are nice floor boards underneath, sand and polish them. You can easily transform the area into a modern, light space by changing the floor cover used.
Upgrade the door levers and cabinet handles.
Many people go to the expense of changing all their robes and cupboards, but you can skip this expense by just painting them and upgrad door levers and matching doors with door stops, also upgrading the cabinet handles. Replace the old rusty handles with some new modern ones you ca easily find at online stores like renovatorstore.com au or ebay.
Adding rooms, white goods equate to adding value.
Add additional air conditioners and other white goods including dishwashers and new range hoods in the kitchen also boost rental yields. Adding built-in wardrobes and even surprisingly adding bedrooms is another easy renovation idea. For example, older houses
often have larger unused rooms or second living rooms that can easily be converted into bedrooms with a simple wall of gyprock. Just by rearranging the layout a little bit you can easily have another room or living room extension. Other simple add-value ideas include adding a lock-up garage to replace the carport or a roller door, security doors with keyless locks, alarms and deadlocks; all of which have great value for tenants who are comparing properties.
Negotiate access to the property before settlement with your vendor
It’s much harder to renovate with a tenant in the property, so where possible, aim to negotiate a vacant possession, six week settlement with access to do minor renovations to prepare for the new tenant. For instance a renovator recently earned where he negotiated terms with the vendor. He bought for the property for $185K, spent 6 weeks over settlement renovating it and the financer valued it on settlement at $265K. He was able to finance the property at the end value and use that equity to keep investing.
Make sure you make your settlement on your new property ‘subject to tenancy’
If it is vacant upon purchase – talk to your agent and arrange to get a tenant before settling; negotiate terms of settlement to include a zero income downtime for you. Whilst settling you can do your renovations and have the agent appraise the rental income based on a completed renovation.
Plan and manage your renovation budget or get some assistance.
When someone’s eyes get too big for their wallet (yes it is very tempting) can lose out BIG TIME and it is no use spending all that time, effort and money to start with a property worth $320K – spend 14 weeks in hard labour renovating for $40K if the property is going to be worth only $340K or even less afterwards!! We all have seen this happen time and time again! Your budget must include every little cost imaginable and you should also have a planned out timeline; planning and budgeting ensures you have factored in absolutely everything including design styles, colours, costs of paint, carpets, labourers, your loan repayments to cover your loss of rent (if your property was tenanted) and mostly accurate quotes on everything; so you don’t have unwanted costly surprises that spoil your plans and blow your financial goals. The worst possible outcome is that you get part of the way through your renovation, to find out there is no money left to finish!
Look for properties in good physical condition already
Look for an easy property where their dress looks tired, or the property is simply unkempt – yet offers huge potential. Steer clear of floors or walls that are falling through cracked or large structural problems.
Do your research, run your numbers and find out comparable sales
Research other renovated properties in the area of similar type; find out if you can buy in at the bottom end of the market and if a renovation will push it up into the next price bracket easily – does your property promise that potential? If so you may have stumbled on a goldmine. Talk to a number of real estate agents in the area and cross reference these with your agent as well.
Always remember! Due diligence is the key!