Dear all,
I have read books from Steve and a few other authors. Among the examples quoted in these books, the successful property investments are always involved with investors hand on renovating the property to increase value.
It would be helpful if experienced investors can comment on this. Thank you.
Regards,
FrancisYou can do a lot of the renos yourself, or farm out the work to other contractors.
Getting the contractors will cost more than what you can do them for most likely, which will eat into your investment returns.
If you are a high income earner and have no time available, then this may be your only option to have the work carried out. It may be more cost effective for the high income earners to go to work and earn more than what they may pay the contractors.
Many of us are semi-retired, or work part-time and have the time, energy and passion to do the renos ourselves. It can be hard work, but it is still fun and our returns are maximised.
Having said that, there are some things that only the professionals should do – electrical work and plumbing for example.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
I agree that doing a reno is a great way to add value. When we purchase a property we always look at how we can unlock value whether that’s with a reno or subdividing. This strategy has seen us increase our equity rapidly, and we have chosen to sell some to realise that profit, and others we have kept for the long term.
Having said that though, most of the reno work we have been able to complete ourselves, except for the plumbing & electrical work, which has saved us thousands of dollars but has meant sacraficing each weekend…..not easy with the kids in tow. So if you can do a lot of the demolition, painting, tiling etc you will be profitable although exhausted each Monday morning!!
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
It may not even have to be anything complicated either Francis..
Meaning a paint job can work wonders, inside or exterior…maybe add an airconditioning system if you want to hold the property and rent it….tidy up the garden/yard…if it’s possible add a bedroom on, especially if it’s only a one or two bedroom place.
So you can value add to improve potential rental returns or wish to resell…maybe a place doesn’t have any garage…outdoor entertainment area…some we can do ourselves, but like the others very mindful of leaving work for the professionals where necessary.
The November 2006 copy of Australian Property Investor magazine has a good guide to renovations and their ballpark figures on costings…it’s quite interesting, and they did it with the help of Archicentre Cost Guide Aug 2006…just keep in mind prices are going up all the same though.
Such is life.[biggrin]
Sam
Hi Francis
That is an interesting question. We have renovated a few properties in the last 5 years and found that although they definitely add value and equity, we could have done almost as well if we had not bothered with anything major as by far the greatest gains were just a matter of time and timing the purchase. I think renos are more significant now that the capital appreciation is not just happening around here (central queensland). Also, it is a bit hard to be hands on if you buy a long way from home. We purchased a negatively geared property in Gladstone ( 4 hous drive) about 1 year ago and specifically chose one already renovated with absolutely nothing to do. The capital gains on that over 12 months have been fantastic.
I guess my thinking is that when things are really moving up, you just enjoy the ride, but when (like now) things are slow, you have to work harder to see any gains at all. We are actually planning to renovate an IP we have owned for years to increase the rent return now that the capital growth has slowed.Louise[biggrin]
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