Forums / Property Investing / Value Adding / How does bank or valuer value renovation?

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  • Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    Hi experts,

    Looking for some advice based on practical experience and/or knowledge of what bank/valuer look for
    to determine the new valuation of a renovation?

    Any good recommendations of good books on:
    – how to best maximise the returns on reno, both re-valuation and rent
    – how to pre-determine returnon reno (valuation and rent) before commencing
    – what reno works may not increase property value and may even risk reducing it
    – etc

    If anyone has real first hand experience of above, appreciate sharing your wisdom.

    Thanks,
    FXD

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    The banks just order an independent valuer to go out and value the property as if it were post renovation – so it doesn’t come to them assessing each of the individual items you’re paying for in the renovation etc – but the overall picture. The best thing to do is to compare it against recent sales in the market of renovated properties and then compare against renovation costs to see what you can do for the best bang for buck. Generally painting, kitchens and bathrooms provide the largest uplift in values, but the latter two generally are the highest cost improvements too.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    Thank you sir.

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    I always think of the valuer as a potential buyer so both the reno and the staging are done as if for sale, so pretty much same rules as sale apply (kitchen, bathrooms, overall street appeal, features buyers like in this area etc)

    Then the valuer comes and I walk with him/her, explain what was done, mention the high quality finishes etc.

    Usually the valuations come back pretty much as expected (as per my own market research and target price, all done before reno began).

    Another thing I usually do is ask a property manager to provide their rental appraisal in writing (I let them know what it’s for and also offer to pay for their time if not planning to have them as PM or if they are not already the PM for this property, all in order to not abuse their service). Then, I submit that report with the order of the valuation, so the valuer knows upfront the rental appraisal, which helps set the property’s price in their mind, even before they leave the office 😉

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Keep the house uncluttered and well presented for when the valuer arrives.

    If you’ve got strong, recent, comparable sales – have those available to show the valuer.

    In terms of best bang for your buck – usually painting/flooring is the cheapest value add.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

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