5 tips for making money on a renovation project
AUSTRALIANS love a good renovation. Since the start of the year Australians have spent close to $15 billion on renovating and building homes.
The future looking bright for development on the Sunshine Coast, and one of the key reasons people choose to renovate is to increase property value.
But with the average Australian renovation costing almost $48,000, it can be difficult to guarantee a return on investment.
Dream Design Property founder Zaki Ameer said successful renovations could generate considerable wealth and risks could be kept relatively low if the strategy and planning was executed correctly.
"Unfortunately, however, many investors and home owners go about renovating in a way that involves more financial risk than necessary," he said.
Here are five tips for generating wealth from every renovation:
1. Avoid anything structural and stick to existing layouts to keep costs down.
Utilising already existing layouts, such as bathrooms and kitchens, and adopting a well-planned cosmetic renovation equates to a quick home revival with minimised costs. It is very possible to exercise this method and achieve a small lump sum profit margin within only a few weeks.
2. Know which areas will add the most value.
It's important to know that the three main areas that increase property values are street appeal, the kitchen and the bathroom. Street appeal is associated with land value in a good location, boycotting major roads and traffic, under flight paths, or close proximity to transport lines. The bathroom and kitchen are also of great interest when it comes to value as they are rooms where considerable amounts of time are spent. Small changes, such as modifying tiles and laminate paint, new light fittings and satisfactory storage, can convert an outdated design to present a more modern appeal.
3. Buy and then renovate at the lower end of the market.
This strategy may appear too ambitious, but there will always be vendors who are desperate to sell, which offers a high-speed, hassle-free opportunity. Even if the house needs a significant amount of renovating, if it is located in a suburb with desirable property values, a significant profit can often be achieved.
4. Time is money so only buy properties which can be cosmetically improved in 3-5 weeks.
It is essential to know the worth of the property after renovations have been completed to determine its profit figure and viability. Avoid properties that require work that will be expensive and time-consuming, such as storm water or rewiring. Instead aim for cosmetic renovations only, which only require external modification with new paints, carpets, appliances, kitchen and bathrooms, and an all-round sufficient tidy-up.
5. Use your creativity wisely.
Cosmetic renovations are visual changes aimed at increasing the physical attraction of a property, and often they are very successful. For example, if the backyard of a property is neglected its value can increase simply by adding basic garden items such as a picket fence, garden beds or plants as it increases the appeal.