If you’ve ever seen renovation shows like The Block you might’ve thought about doing the same! So here are the things we want you to consider to make sure you’re prepared to create that equity in your own investment property!
Why cosmetic renovations?
Besides seeing the cool reveals on your favourite renovation show, why might you want to do cosmetic renovations to your own property?
It can be a quick way to create and manufacture your own equity growth!
If you’re handy and willing to do some of the work yourself, you could save some big money. Lots of the costs of renovation come from hiring trades to do the work. By doing it yourself, you’re already a step ahead. Instead of waiting for the market to do its thing, you can increase the value yourself. If you’re looking to rent, it can mean the difference between getting a lower amount or an increase you might’ve had to wait years for.
What type of property is the best?
Not all properties will have room for the kind of growth cosmetic renovation could get you. This is the strategy of buying the worst house in the best location!
Look for a house that is structurally sound, but looks terrible. You’re looking for things that can be easily fixed without costing you dearly and give you more value than the amount of money you’re putting in. Keep reading to see what changes we recommend you look out for!
Who should you speak to?
We can’t expect you to be an expert overnight, so there are a few people who can help you!
Speaking to an experienced real estate agent, or property manager who can actually go through the property with you can give you peace of mind. They have the professional knowledge on what is actually worth spending money on. They will know what’s going to increase the value of your house or rent. If you’re doing this investment strategy you want to make sure every dollar counts. You don’t want to bother spending money on a property if it won’t get you additional value.
If you’re not experienced at managing renovation projects have no fear! You can hire a project manager or someone to help you manage your timeline. Time is money! A quick renovation will have less of an impact on your return.
If you need to borrow money for your cosmetic renovations we may have some options for you. If there are no funding options available you may have to foot the bill yourself. Speak to your Rise High Mortgage Broker to find out.
Easy ways to add value:
Not sure what counts as cosmetic and what to know what to look for? We have some suggestions for thing that could add value to your investment property…
- resurfacing: kitchen and bathroom cupboards
- replacing handles
These things can make a big difference to aesthetic and can be really simple changes. If you’re feeling up to the challenge you might look at more complicated changes like…
- turn windows into exterior doors
- expand outdoor living spaces
- create more living spaces
- knock down a wall and make 2 small rooms one big space
- create an open plan living space
- Divide a large space into 2 spaces
The list goes on! You’re only limited by the value of the area you have bought into and the amount of value you can add. If you exceed the value however, there could be risks.
As with any investment there are, of course, risks involved.
It can be very easy to over capitalise when you’re renovating. Make sure you don’t spend money on things that aren’t going to increase value. If you do you could be spending more on the property than it’s worth.
Those renovation shows we mentioned make it look easy to buy and flip houses. But this isn’t always how it works out. This can be a really risky strategy with a fine line between quick profit and big loss. This risks are lessened with the buy and hold strategy, where you may want to renovate then hold the property for increased rent.
Which ever way you would like to go we are here to help. If you’re interested in this strategy, give us a call and we can help you get the most from your property. Leave your details below and we can help you create your best investment portfolio!