Renovate Property like a Successful Investor
When you’re trying to create equity and cash flow from your current or potential properties, often the easiest way is to refresh some of the property’s character by fixing up rooms and appearances of the house. This could be updating the kitchen, bathroom, or bedrooms with new carpet, taps, benchtops, the options are endless. The key is appropriate and unemotional spending. Your budget needs to fall well below the end value you’re trying to build so you can maximise equity built while minimising your costs.
Inexperienced renovators often go over budget and those who do things themselves do not always accurately predict the time and effort required. Many successful property investors have stories that go something like this ‘in the beginning I tore up carpet, painted rooms, changed toilets etc and it took a long time and was hard work, it meant I could not focus on buying more property and I wish I just paid people to do it for me’. My guess is most people would prefer to try some things themselves which is fine as long as you’re not doing any structural changes that require consent.
Check with your mortgage adviser about funding renovations on your mortgage and about what quotes the banks will require. You might need valuations at some stage to help you either get the funding or realise the equity on paper.
With a relatively small expense of say $10,000, you can actually make a significant impact on the registered valuation of your properties. Some people have built over $50,000 of value from $10,000 of investment! Cosmetic improvements will impact rental yields – pushing them up, and it’s quite likely the renovations you complete will attract more desirable tenants who will look after the house if things are tidy and new.
Renovations need to be ‘fit for purpose’ because there is no point tidying up the garden for a bunch of uni students who care more about a new dishwasher. If you want to maximise the house value to help with further borrowing, the landscaping will be more important than a washer/dryer but if you want to increase weekly rent the opposite probably holds true. Talk with other property investors, read books, do not overspend and always budget for longer renovation times than you are quoted.
If you need to finance above 80% on your property, we can assist with multiple options using bank and non-bank lenders. You do not always need to use high-interest loans. Take the mortgage snapshot which automatically calculates your purchasing ability, potential mortgage savings, or ability to top-up your mortgage – from here one of the advisers will look over your situation and give you a no obligation friendly call to talk through your options.