I have only just got into property investing and I have bought a property that requires renovation. The property was built in 1950 and nothing has been done since. My qustion is what will add the best value. While thte property is structual in good condition it requires a lot of cosmetic work. I have talked to several people and the answers vary, as some say I should redo the kitchen and bathroom, put a deck on, and drive on access etc, others have said I should just tidy the place up and this will allow a new owner to add their own touch and bigger scale renovations will not equal profit.
There is also the possiblity of subdividing and here I am not sure if it is worth dividing and putting a kit set house on or leaving as is or even selling the section seperately. Any thoughts would be greatily appreciated.
CHeers
Phillip
My first stop would be your local Council to determine first if it is in fact possible to subdivide, and they should be able to give you an idea of fees also. If you can subdivide and you’re new to the game perhaps it would be best to approach a town planner or surveyor who can manage the project for you.
If you can’t subdivide then you need to decide what you’re going to do with the property. Renovate to rent or renovate to sell. The standard of finish will be different. Do a bit of research in your area and find out how much renovated properties are selling for and then work your budget out from this. If you intend to rent just go for basic “clean and safe”. Paint, new carpet, tidy yard and fix fencing. For an old 1950’s style kitchen if its ok just paint to doors and perhaps look at putting in new post formed laminex tops and a tiled splashback. Replace the stove if necessary with a basic upright ($700). Replace anything broken, rusty and leaking.
For a reno to resell you first need to work out your target market. Is it for a young couple, elderley or family ? Taylor the reno to suit and look at opening up the house making it open plan. You’ll definately need a new kitchen and bathroom with good quality appliances and have an Electrician out to install modern lighting and fans. Don;t go overboard, remember your budget and include a min profit of $40K.
I hope this has helped you Phillip.
Good luck,Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”Phillip,
A good rule of thumb is to not spend more than 10% of the propertys value on renos.For every dollar you spend you should get at least $2 back. Market research is the key, Amanda is right. Look at what other similar propertys in the area are selling for(not the asking price)renovated and unrenovated and know exactly what you can expect from a finished product. You can then determine what the right course of action is. The main point is to know what your profit will be before you commence the project, this is what differentiates investing from speculating.
Gavin
HI Phillip,
At the risk of being howled down and called a ‘Sad Sack’ again I’ll make the observation that these sorts of decisions should have been made before purchase and as part of your research.
A crucial aspect to successful property investment is to know what you are faced with, what you can afford, what value can be added etc and as appropriate to your investment goals before (not after) entering into a purchase.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Also ask Council about “VPO”‘s, “Heritage” listings and “Covenants” as all will significantly restrict what you can and can’t do…
“ask and you shall recieve”
Sincerely, Jarrah
++CASH FLOW PROPERTY HUNTER
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0431433288“be ye angels?”,
“nay we are but MEN!”Originally posted by gavinh:Phillip,
A good rule of thumb is to not spend more than 10% of the propertys value on renos.For every dollar you spend you should get at least $2 back.
i have been looking for a formula like this 10% rule,thank you , Also just another general question on reno’s if you did put on a 4th bedroom and an ensuite how much is it worth in the same market you bought? is there a formula / % for this?
this is what is holding me back could i go terribly wrong doing these type of renos over and over is it safe?White
dissagree with 10% of value. I often spend 20%
agree with spending $1 to get $2 back
I wont buy a house with a new kitchen or bathroom. why pay someone a premium for something you can do yourself?
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