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Australians love makeovers. We love them so much that millions of us watch The Block, every “7 O’Block Weeknight” as couples race against time and each other trying to turn a profit through renovations. Unless you’re lucky enough to be one of the contestants for this award winning show, you’ll be renovating your investment property on your own dime and at a much more reasonable pace!
The same rules for renovation apply no matter the individual doing the renovations. The cost of breaking the rules is often over-capitalisation and the subsequent elimination of any gain you were seeking to obtain in the first place!
So let’s start with the obvious. The desired outcome is to gain $2 for every $1 you spend. How do you keep costs down yet achieve a desirable uplift in value? By spending your renovation dollars where they’ll do the most good.
Carefully review the area demographic, looking for what appeals to the largest common denominator. Take a look at the features developers are including in their projects and speak with local real estate agents. Few individuals understand local markets like an agent. Find an agent who is willing to help you and ask them if your property’s value will grow by at least as much as it will cost you to renovate.
Few things improve the value of a property like newly refurbished kitchens and baths. Newly built or resurfaced benchtops, a fresh coat of paint and newly laid tile and/or carpeting will deliver a lot of bang for your buck!
To begin, aside from taking care of obvious repairs/upgrades, consider what kinds of features you would appreciate if you were renting. Tenants will have no problem paying for extra features such as added security or a patio/balcony for entertaining. For some inspiration on how you can improve your investment property yields, take a look at some easy renovation ideas:
- Install new carpeting and/or tile
- Liven things up with a new coat of paint
- Paint a feature wall to add drama to a room
- Install new fixtures in the bath and/or kitchen
- Put in a new air conditioner
- Install built-in wardrobes
- Build an ensuite for the master bedroom
- If possible, create a new room by adding a wall
- Create a lock-up garage by walling in the carport
- Build a deck or undercover BBQ space
- Install security features such as an alarm system, security door, security lighting and deadlocks
Rather than buy straight from the big box store or major retailer, consider finding materials from a variety of sources. Not only will you save money, you will add individuality to your property, which holds great appeal with tenants and buyers alike. Starting your search for materials online, consider sites such as:
- Professional auctioneers – graysonline.com.au
- Online auction sites, e.g. – ebay.com.au
- Online classifieds, e.g. – tradingpost.com.au
- Free/trade, e.g. – freecycle.org/group/au/
Moving offline, look for items at garage sales, salvage yards or op shops. Be creative in your search for materials and think outside of the box!
According to the Archicenter Cost Guide of 2013, approximately 33% of your budget can go towards tradespeople. You can eliminate some of those costs by doing some of the smaller jobs, such as painting, installing ceiling fans, etc. yourself. Despite the fact that you may be an avid do-it-yourself kind of person, chances are good that you will have labour costs to contend with at some point during your renovations. Be honest with yourself and know your own limitations, however don’t be afraid to step outside of your comfort zone just a bit and learn something new.
Take some time and have a look at all of the great videos and articles detailing a myriad of renovation topics. A number of home improvement stores are a useful resource for such subjects as how to lay tile, how to install a bathtub and much more. You might surprise yourself at what you can do!
- Have a valuation done before you begin to ensure that your property will support the planned changes.
- Compare to find the lowest possible price on your materials and don’t be afraid to try something unconventional in your renovation plans!
- Real estate agents are much more amenable to your requests if they see a potential revenue stream (property management).
- The Australian Institute of Architects provides a Cost Guide which is packed full of information to help you sort out your costings.