You may be thinking, I can’t wait to use equity to expand my portfolio…but wait, what is equity?
And that’s a great question! We recommend you check out our short blog, Unlocking the Equity in Your Home, first, before reading on.
Fantastic! Now that we understand what equity is, how to calculate it, and how to use it to grow your property portfolio, let’s discuss how you can generate it yourself, rather than wait for natural growth.
Tip #1: Small/Cosmetic Renovations
You don’t need major renovations to see a difference in your property’s value. Ultimately, improving the visual appeal and functionality of your property can have a positive effect! Here are some ideas:
- Apply a fresh coat of paint
- Re-do the flooring
- Renovate the kitchen
Interested? For a more in-depth discussion of this strategy (+ some extra ideas), check out our blog: Cosmetic renovations can add value to your property.
Tip #2: Reconfigure the Floor Plan
Our second tip is more advanced, but it can be highly effective in accelerating your equity growth. Depending on your property, you may be able to reconfigure the floor plan to add an extra bedroom—turning a two-bedroom home into a three-bedroom or a three-bedroom into a four-bedroom. Identifying properties with the potential for these value-adding opportunities is key. For example, if the median price for a two-bedroom property in a particular suburb is $600,000 and a three-bedroom property is $800,000, but you can reconfigure the floor plan for just $75,000, you now have a three-bedroom home that could be worth around $800,000—yet your total cost is only $675,000. This means you’ve effectively created $125,000 in equity through a strategic renovation. Spotting these opportunities before purchasing can be a game-changer for investors looking to grow their portfolio faster. If you’d like to chat to our team about whether this is possible for you, and how to make it happen, click here.
Tip #3: Maximise Investment Potential with a Granny Flat
Adding a granny flat can significantly increase your property’s value and equity over the long term. For investors, it creates a dual-income opportunity, making the property more attractive by offering the potential for higher rental returns and future resale value. For owner-occupiers, a granny flat provides flexible living space, perfect for larger families or multi-generational living, enhancing the property’s appeal as a long-term home. If the cost of building a granny flat is lower than the value it adds, you can instantly increase your equity, while also improving loan serviceability and creating opportunities for future development.
Tip #4: Subdivision and Development
Have you thought about your property’s potential for subdivision and development? If you can capitalise on this strategy, not only can you add value to your property, but you can also maximise the returns it generates!
Our blog, How to make your subdivision and development project a success, will take you through the pros and cons and steps to success. Check it out!
Whether you’re ready to kickstart your journey with these tips, or you want more clarity and support, our team would love to help you! Contact us today!
