Three years ago when I bought my second investment property, my investment partner and I spent three days replacing the carpets, repainting and tidying up an unliveable property. This renovation cost us $3000 and gave us a property which returned a 9%+ rental yield for three years. Unfortunately three years latter the house is looking extremely tired, due in part to our rushed renovation and in to really poor tenets. Having learnt a few lessons in the last three years this time around we will invest some serious money into the property in the hope of increasing the rental yield to 14%+ and making a solid capital gain.
The lesson I learnt was to only do what needs to be done to make money in the short term and do it smart. Three years ago we could of completely over capitalised on the renovation. Instead we got the short term gain and are re-investing the profits back into creating a higher yielding property today.
Mortgage Choice recently surveyed homeowners asking them if they planned to renovate.
Forty per cent said they were, with the majority highlighting the kitchen, bathroom and alfresco as their major priorities.
Property Observer surveyed renovating specialists across the board: from investors, to designers and architects, here are the hottest renovating tips straight from the experts.
- Decide whether you are buying an investment property or making a home. Are you planning to renovate and sell? Or buy, renovate and hold? This decision should guide what kind of renovations you undertake and how much you will invest in them.
- Research your architect and remember that trends come and go, something cutting edge today may look embarrassingly dated tomorrow and this will affect its re-sale value. Keep things simple, classic well designed renovations, built with skill should be your priority.
- Remember the classics, put your money where it shows, this means invest in quality kitchen and bathroom renovations. As a rule 5 per cent of the value of your house should be in your kitchen and 1 per cent spent on the bathroom. These two rooms add real fiscal value to your home.
- First impressions count. A smarted up and renovated facade makes your house immediately attractive, as does simple landscaping and an alfresco.
The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.