Renovating can be an extremely successful way to instantly maximise the value of any second-hand investment property.
Not only can renovating contribute to a property’s capital growth, but the instant additional equity that comes from renovating can be used to help fund any negative cash flow.
Even in a flat market, making a concerted effort to upgrade your property will also prevent age-related damage for years to come, giving you a passive, trouble-free investment.
However, there is one glitch – very few property owners know how to achieve these results without any stress. Here’s my advice:
Do your research before renovating
It’s easy enough to sand the floorboards, paint some bedrooms and call yourself a renovator, but knowing exactly what you need to do to improve a space and increase a property’s overall value requires expert knowledge.
How do you know if the tiler you’ve chosen has quoted the right price? Will your bathroom and kitchen really take two weeks as promised – or will it drag out to two months, losing you potential rent for weeks that you haven’t planned for? Should you always go with the cheapest quote?
Renovations require careful planning and execution. If the renovations are carried out correctly and with the right advice, you can make tens of thousands of dollars in equity in the first year alone.
It can be as simple as new paint and new carpet, or it can be as complex as a complete refurbishment.
Hire a project manager
Hiring a project manager to oversee larger-scale renovations can be very worthwhile.
You might think you can save thousands by managing the project yourself, but this comes with risks.
A project manager can prevent arguments when there are several parties doing different pieces of the same job.
Not only can a good project manager take responsibility for costings and timings, but they can mediate between contractors and tradespeople, pushing them into gear if they appear to be lagging.
They can also take care of drawing plans, negotiate with councils for approval, as well as manage all aspects of the renovation to ensure the final product is completed to perfection.
While the project manager can be anyone from an architect or building designer, interior designer or builder, to a professional property investor or renovator, ultimately they need to be experienced, trustworthy and have a team of reliable tradespeople they can call on.
Know how to add value with little outlay
If you’re looking to boost the price of your property but don’t want to take on a large renovation project, there are several small-scale improvements you can do yourself to instantly lift the value of your home.
The main thing to keep in mind is what can add value to your property without overcapitalising.
Why not try cleaning and painting the inside and outside of your home, for instance. A fresh coat of paint can make a world of difference to worn-out interiors, and it’s impressive how much a decent clean can increase the appeal of a home.
Likewise, a simple re-carpeting job can cost as little as $5000 while adding as much as $10–$20,000 to a property’s value.
Finally, instead of adding a whole new kitchen, why not consider changing the kitchen cupboard doors and replacing old light fittings, switches and sockets.
The aspect of any home is important and, if a room is well-lit, it can instantly lift the feeling of a dated room.
Regardless of whether you’re considering minor upgrades or looking to undertake a huge renovation, a couple of low-fuss changes can often make a big difference to your property’s value.
About Chris Gray
Chris Gray is CEO of Your Empire, a buyers agency which builds property portfolios for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris’s team buys 1-2 properties a week and often spends $5m+ a year renovating on others behalf, providing a unique insight into market conditions and buyer and seller sentiment. Chris hosts ‘Sky News Real Estate – Smart Investing’ each Monday on Sky News Business channel, where he interviews various heads of property research companies and major industry figures. Chris is a qualified accountant, buyers’ agent and mortgage broker. For more information, visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire