As we learned last month, a well-executed property renovation can significantly improve your return on investment. Richard Sheppard shares more of his top tips on renovating for increased property value and rental income.
Consider your options
Before deciding that renovation is the best strategy for you, thoroughly research the area you are considering investing in. If the economic outlook doesn’t look favourable for the area, then perhaps renovation isn’t the best strategy for now. You should also consider engaging some professional advice from a buyer’s agent, builder, experienced renovator or private building certifier to help identify and assess any properties you may have shortlisted as having strong potential.
Keep in mind that an ill-planned renovation can be time consuming and expensive, so be methodical and as a rule of thumb, aim to make two to three dollars for every dollar spent. If done well, many of these steps can easily return more than two dollars for every dollar spent, even when using professional tradespeople. For example, well-chosen and properly applied paint can add significant value to a property on any budget. For an average house, paint (inside and out) costs around $1300 to $2000, and then around $6000 to have it professionally applied. This could improve the value of the property by around $10,000 to $30,000 or more.
First impressions of the front façade of a property (or street appeal as its commonly referred to in real estate circles) can have a disproportionate effect on the overall impression of the value of the property, so this step is worth careful consideration. Everything you can see from the street including the roof, driveways and paths, fences, gates and letterboxes, and gardens should be considered. You can do most of this work yourself on a very low budget if needed and still add significant value to the property.
Several Peninsula Living property articles in previous issues have talked at length about the benefits of adding a $100,000 garden flat (which can add in excess of $200,000 value and rental income of up to $500 per week). Garden flats can be built the traditional way in the backyard but may also be built as an extension to the home at ground level or above the home or garage. This type of project can be completed independently of the main house and used as equity and income to fund further renovation or investment. Similar returns may be achieved by adding a bedroom when rearranging walls while opening up the living areas, or in the attic.
Richard Sheppard is the Managing Director of inSynergy Property and Finance Solutions. inSynergy is a licensed investment property buyers’ agent that provides professional property investment advice, property market research and specialised mortgage broking services. Visit www.insynergy.net.au or phone 1300 308 808.