Renovating your property is an effective way to increase your rental returns and add value to your property, particularly before a sale. So, we reveal the expert tips to help you make the most out of your home reno!
Renovating can not only boost the value of your property, but it can also make your home more functional and attractive.
Property expert Chris Gray, author of The Effortless Empire - Building Wealth From Property, believes the benefits of keeping your property in tip-top condition are far reaching.
“Renovations will not only increase your rental yield, but they can prevent maintenance for years to come,” Gray says.
“Most people dread renovations and often can't see the true potential of a property if unrenovated, but if done correctly and with the right advice, you can make tens of thousands of dollars in equity in the first year alone. It can be as simple as a paint and re-carpet, or it can be as big as a complete gut and refurbishment.”
According to Gray, the most commonly made mistakes by homeowners when renovating include:
- Overcapitalising by spending too much money
- Undercapitalising by not spending enough money
- Renovating the parts of the property that won’t actually bring a return on investment.
Therefore, it’s a good idea to thoroughly plan your renovation before you begin, and consider asking a professional – such as a renovation specialist or real estate agent – for their expert opinion.
Tips for success
Gray has personally managed dozens of property renovations, so he’s learnt a few tricks of the trade to ensure a successful venture.
“In order to make money, sometimes you need to spend money and hire the quickest and most efficient [tradespeople]. The cheapest tradesperson is not always the best,” Gray warns.
“They may start multiple jobs and never get round to finishing them, or they do a superficial job, which causes problems down the track. Remember, the faster and better the tradesperson, the quicker you will be placing tenants in the property, and you'll make more money from rent and capital growth.”
Also, before you start your renovation, it’s a great idea to engage an independent property valuer, so you can gain a realistic opinion of the property’s worth – and more importantly, it’s potential worth.
“You may plan to spend $60,000 on your extension, thinking it will add $120,000 to the property’s value. However, an efficient valuer will be aware of circumstantial factors, such as the value that some homes in your street won’t sell above,” Gray adds.