We have already established that investing in the Australian property market is a great way to create wealth for yourself and your family let’s now look at adding value effectively.
If you want to add value quickly then you will know that renovating will certainly do that but you must keep the cost low yet still achieve a significant lift in value. Australians love to renovate and do-it-yourself can be very rewarding it can also be disastrous without some guidelines to follow.
When you are dealing with an investment property especially profitable, effective renovations are not always easy to achieve. Be very careful before you purchase a property in need of repairs that you know exactly what you are dealing with, budgets can easily be blown away in this area.
Here are some general rules to follow to help you decide if a renovation project is going to be worth your while. Please remember when renovating an investment property that you must not become emotionally attached, this is not your home, it’s business and you’re in it for profit.
Rule No.1…The best returns are obtained when you improve the cosmetic appearance of the property for the least expense.
Rule No.2…Gaining value in property renovation is most likely to occur in a rising property market. So you have to be careful you don’t become trapped at the end of the property cycle.
Rule No.3…If you are planning to sell your renovated properties, make sure you have an understanding of property prices. This ensures you don’t spend needlessly on unnecessary improvements, while at the same time you can maximise your profit potential.
Rule No.4…Take advantage that many people don’t have the time or inclination to renovate. These are your target market because these people want to live in or rent a property that is in good condition – one that they don’t have to do anything to. Having said this, most renovated properties are sold to busy couples or investors.
Rule No.5…Bear in mind that many people do not have the skill to renovate with style on a budget. Improving your skill in this area will increase the amount of value you can add to a property at the least expense. Experience makes this task less arduous and risky.
Rule No.6…If you are planing to renovate, ensure you have a flexible loan set up that allows you to access money as you need it. A revolving line of credit is one of the best ways of accessing your money through a loan facility.
Rule No.7…Before beginning the whole process make sure you have a budget for the renovations and a plan of what you intend to do. Once settlement has occurred you do not want to waste time or money trying to orgasnise quotes and tradesmen when this could have been organised prior to settlement date.
Never enter a property agreement unless you are sure the transaction is going to be profitable. This means you need to be very confident you know all the cost involved in buying, selling and renovating the property.
References
Seven Rules of Renovation part of What I Didn’t Learn in School But Wish I Had, Homestudy Program by Jamie McIntyre with Leigh Barker, CPA PNA ACIS SIA(Aff)
Today’s Power Thought
‘I am open and receptive to new avenues of income’.
Repeat this several times today.
Have an awesome day
Teresa and the Team at
Australia Wealth
Tags: Australian property market, creating wealth, Jamie McIntyre, renovating property
