Written by Hugh Watson – Elders Residential Echuca
In my personal experience investing in property, I have found renovating can be a great way to build equity in a property quickly. Properties that are on the market that require a bit of work can scare some potential purchasers away, but for me these are the perfect properties to invest in.
The reason I feel this way is that purchasing a property requiring work to be done, usually means lower asking price. Lower asking price means lower purchasing price and lower purchasing price means lower stamp duty and of course lower mortgage repayments. Instead of paying a premium for the perfect house and potentially becoming cash flow poor in your day to day life, paying less upfront and spending the extra money on renovating the property yourself is a great way to not only build equity but also in my case get a higher rent return and a better calibre of tenants. So, whether your wanting to flip a property or build a rental portfolio, renovating could be the answer for you.
My own experiences with renovating have taught me that it is not easy, but it is very rewarding and can be very financially beneficial. Obviously, you must be wary not to over capitalize when renovating a property but if you set out a plan at the start and stick to a budget it’s hard to go wrong in my opinion. Focusing on the main parts of a property such as bathrooms and kitchens when renovating is smart, but it is also important to keep a consistent design flowing through a property. This is where setting out a plan at the start is important, think of the end result and work towards that.
In the end if you don’t have a clear vision for your renovation you could end up with a mix matched house that doesn’t flow and this could potentially hurt your profit margins. Always do your own research and I highly recommend you always get a building and pest inspection to avoid any nasty surprises. Everybody’s situation is different so work out what is best suited for your own situation and keep an open mind when it comes to purchasing property.