The key to a ‘renovate and flip’ (quick turnover) strategy lies in knowing what improvements to make, in order to generate the best returns.
Repainting, for example, can be less expensive when compared with other renovation jobs and it could restore a tired property quite quickly. Best of all, you may be able to do it yourself and it may take just a weekend or two to refresh the property in an exciting new colour palette.
That said, before you start a renovation – even splashing on a coat of paint – be sure to do some research and check out the sort of money renovated properties in your area are selling for. It’s pointless spending the money and doing the work unless there’s a clear benefit down the track.
Also, if you choose to renovate an apartment, townhouse or villa, be sure to check with the strata management first.
Noteworthy additions that can increase the value of a strata property include enclosing a balcony to create a home office, study or sunroom (subject to your local council’s approval). Alternatively, making room in a kitchen or bathroom for a washing machine and dryer instantly creates an internal laundry. Other examples include adding a split system air-conditioner, some timber floating floors over concrete, and using plaster to hide unsightly vermiculite ceilings.
Many people find a renovation can take longer to complete than originally planned and it often costs more. Cost blow outs can occur where there are unexpected problems with the home’s condition that need to be fixed. Also many owners tend to make adjustments and additions to the original contract of works with a builder. These adjustments can often hike up costs as the renovation proceeds. Gathering a number of building quotes, then keeping a lid on costs once the renovation gets underway, will help produce the best financial outcome for investors.
An experienced licensed real estate agent (LREA) can be a valuable ally in helping you secure an investment property. While the loyalty of a real estate agent is ultimately with the vendor, who pays their commission, finding a buyer is also central to the interests of an agent.
Real estate agents have information for buyers and investors – you just need to know what questions to ask. Start by seeking an agent’s view on the pricing of a property – ask them politely to justify the asking price to you. As part of this examination, ask the agent to provide you with a recent sales report that shows other similar properties and what they sold for. It’s essential to make sure the price tag attached to a property is in step with prevailing market conditions.
Likewise, you should ask why the vendor is selling. An answer here can save you time and money. For instance, if the vendor has bought elsewhere, he or she might be very motivated to sell, especially if they’re paying bridging finance.
This information is current as at 15/08/2016.
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