RENOVATE TO THE VALUE OF THE MARKET
- Written by Melanie Toye, August 24, 2014
When entering your very first renovation project. It is easy to get carried away. By spending a lot of money and a lot of time renovating a project. However, it is very important before you even start to renovate. That you understand the current value that the near-by properties are selling for.
Example of losing money when renovating above the market
If for example, you found a property at $299,000. And you think, I could fix up the bathrooms, build onto the back of the house and create another room. Plus create an outdoor entertaining area. You could be looked into $50,000 plus in renovations. If however, the properties that are renovated and looking polished and finished in the suburb are selling for $345,000. You could actually lose money when you go to sell.
If you want to keep renovating and selling down the track. The first property you do up, is your learning curve. You will learn what to do and not do the second time around. But the important factor here is, you will want to come out with your initial financial investment into the property. Therefore, you can use the deposit again for your next DIY project.
Potential risk when renovating
The other potential risk when you renovate, is you need to work out a timeframe for when you aim to complete the renovation. And you need to try and aim for a rise in the market. If the market is not moving, you might have the property for sale for quite some time. Every month, it will be costing you more. And the longer you have the property on the market, the longer it could cost you money and have you down the track, accept a much lower price. Losing you money.
How to get the most value out of renovating, to add to the end price
Therefore, it is important to decide before you begin what renovations you will do that will gain the most value for the property. Have a look at the surrounding properties and see what similarities they have completed. That you may also want to add to your property. If most properties in the street, have a similar style front fence and yours doesn't. You might want to add the same fence style, to add the same street appeal to the character of your property.
Also look at online real estate sites and see what has recently sold in the area and see what their properties look like, noting the price they sold it for. If you want to renovate and be up to the same standard as their property. Then you may have a chance to receive a similar selling price. (Noting land size, house size etc. is similar).
Don't let a renovation project put strain on your financials. Know exactly your budget and always plan to spend less than your budget. To allow some money in reserve, in case you need the funds for an emergency fix during the renovation.
- Buying property in a natural disaster area
- Renovate to the value of the market
- Why you shouldn't wait to get into the property market
- Property Investment Choices
- Before you go property shopping, read this
- Three things to consider before upsizing your property
- How much would you spend on an investment property?
- Holiday home investments - is it worth it?
- Passive income for now and the future
- Let The Block be your guide on how buy & sell works
- Decisions, decisions. Fixed or variable?
- Off the plan property purchases
- 2014 - The year of property
- Customer service is our focus
- Buying to renovate and sell
- Another way to look at property
- Manage your own rental property
- December - Is it a bad time to sell?
- Sick of renting?
- Difference between a bigger property vs a smaller one
- 30 Days of Packing during Christmas
- What I learned from buying my first property
- The right time to sell
- The risk going guarantor
- How do you dream big when on a budget?
- First home or first investment?
- Got equity?
- Buying your last home
- Property purchases based on climate change
- The renovators dream
- Auctions are a winner
- Planning for your financial future
- Cheaper to buy than rent
- Pay off your mortgage sooner
- The Effects of Having Low Interest Rates
- Planning for the future
- Looking to Invest in Property?
- How to Choose a Mortgage Broker
- First Time Mortgage Borrowers
- Be 'In the Know' When Buying a Property
- Refinancing Your Mortgage to Build Your Financial Portfolio
- Borrowing in a Self Managed Super Fund
- Major Life Decisions
- Which State Wins the Popularity Race?
- How to Build a Portfolio of Multiple Properties
- Seeking Funds For Your Investment?
- Boost Your Home Value
- When Buying A Unit
- Take the Stress Out Of Buying Your Home With These Handy Tips
- Refinancing - The Smarter Way to Lower Your Home Loan Repayments
- How to Build A Good Deposit
- Lower Your Mortgage With These Simple Tips
- Big Decision - Overseas Travel or Buy Your First Home?
- Buying Off the Plan
- Saving For A Deposit