Many investors are in the mind frame that a good way to add value to an investment property is to hold onto it for a number of years, allowing the investment to grow in capital gains. Another option is to take a short term approach and to renovate the property for a profit.
Property renovations, ranging from a quick cosmetic face lift or a more rigorous structural change, can help investors add instant value to a property and potentially enable them to make a greater return on their investment during resale.
The improvements can be as simple as replacing outdated or weathered features such as the colour scheme, wallpaper, fittings, features and storage areas.
On the flipside, it may include structural changes to modernise the space and/or better suit the lifestyle of your intended buyer or tenant demographic, such as installing new wardrobes, knocking down walls to open the space up or putting in a new kitchen and bathroom.
While this might sound like a great option, before you draft your renovation plans it’s a good idea to investigate whether you can achieve your desired renovation without over capitalising on the investment, that is, when the cost of the renovation outweighs the value it will add to the property.
For this reason you might consider getting on an expert on board to help with the project. Consulting experts, such as a property valuer and real estate agent will help you to determine if your $20,000 kitchen renovation will add enough value to your property to warrant the expense and the effort. If the research shows that your intended renovations are unlikely to live up to your expectations, it gives you an opportunity to modify your renovation and investment plans.
Once you’ve settled on the plan of action, it’s important to turn your attention to how you intend to fund the renovations. Depending on the scale of changes, there may be a number of different finance options to consider such as a loan top up, personal loan, line of credit loan or even a construction loan.
Borrowing a little extra now to complete some cost-effective renovations may be a great way to add value to your property in the near future. On the flip side, something as small as a fresh coat of paint could even do the job too!
For help with funding your renovation project, call Joanne today on 9802 2279.