In recent years, buying a house in Sydney and Melbourne was almost a guaranteed winner, as the two cities enjoyed a tremendous run of capital growth.
That may not come with the same level of guaranteed returns anymore, however, with predictions circulating that the two markets are set for a price slowdown or in the worst case scenario, price corrections.
With that in mind, one property investment advisor has suggested investors in slowing can add further value to their properties through renovations
Helen Collier-Kogtevs, director of property investment advisors Real Wealth Australia, said renovations can be a good way to add value to a property, but that investors should make sure they have their renovation planned out before picking up the tools.
“The bottom line with any renovation is not to rush into anything,” Collier-Kogtevs said.
“Do your research and your due diligence to ensure that you execute a renovation that you are happy with and one that is ultimately profitable for your portfolio,” she said.
A key part of that, Collier-Kogtevs said is to take a step back and ensure the right type of work is being done.
“You’re not renovating for your own tastes. You may love a bright red wall, but remember that you are making improvements for the purpose of increasing the value of your investment, so keep to appealing colours and styles that suit the tastes of the market,” she said.
“The purpose of your renovation is to create a more appealing home for tenants or buyers, and therefore make you more money. A real estate agent will be able to view your property with an objective eye and help you determine which key renovations would help the property rent or sell more easily.”
For first-time renovators, Collier-Kogtevs recommends sticking to basic, cosmetic upgrades, while for those more experienced she said having a strict budget is important to ensuring your project doesn’t become a money pit.
“A good rule of thumb is to spend less than 10% of the purchase price on your renovation. If the property costs $300,000 then limit your renovation budget to $30,000.
“Avoid adding rooms, embarking on structural repairs or installing a pool, as these projects can be very costly.”
While knowing how much you want to spend and what work you want done is important, the time of year you choose to start the work could also prove to be a money-saver.
“November and December are usually peak times for contractors, as everyone wants their project completed before Christmas,” Collier-Kogtevs said
“February, however, after home entertaining has died down, is often slow. If you have the luxury, try to coincide work on your renovation with a quiet time then quotes may be cheaper and tradesmen are likely to be able to complete the job for you more quickly than in the busier times.”
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