Renovating an investment property for income gains, if done well, is one of the single most satisfying and financially rewarding things you could achieve in property investment.

In this second article we give you further insight into making property renovation a great opportunity for you.

The truth is that renovating investment property is an involved and complicated process. But we can help.

In last month’s article we looked at a range of issues including starting out with your end game in mind, understanding the gains you wish to make by having a clear picture of your entry costs, improvements to be made and buffering a contingency.

I remind you that becoming a great project manager is perhaps the best skill you can bring to any reno deal.

Here are some more tips to guide you in successfully renovating an investment property:

1. Be Armed With Knowledge

When you look at a property there is a lot you will need to know about it. Here are some questions you might ask:

  • What is the property worth?
  • What needs to be done?
  • What should be done to capitalise on a profit?
  • What is the cost of works?
  • Based on your end result get an honest market appraisal on your plans

Due Diligence and knowing all the ins and outs are the key.

2. Know Who Your Selling To – Remember Capital Gain Is The Game

Too often in investment property renovation investors are unclear of the market they are selling to. Make sure when you are deciding on the kind of dwelling you are ending up with that the improvements will suit the local demographic.

For example, if you are renovating a small two bedroom apartment in a dense urban area surrounded by chic cafes and restaurants you are likely to be targeting a young professional or possibly even singles market. Know what this market is looking for and adapt appropriately. Also use colours, textures and furnishings that are appropriate for your market.

This is a good time to remind budding renovators to not get too personal or emotional in your improvements. You are improving to sell not to live in. Keeping it simple also keeps the profit larger.

3. External Factors

What else could possibly hinder the profitability of your development? Use the settlement period to discuss your plans with the local council, if independent assessors are involved perhaps get them onside with your ideas.

Build a relationship with a reliable building team – particularly one you might be able to pay to handle your estimating for you – if you aren’t planning on doing it yourself. Truth is we do very little of our own physical work now purely managing the deal and the project.

At Portfolios we can even show you strategies how to finance the deal using other people’s money and time.

4. Get Loan Pre Approvals

This is your greatest bargaining tool. Both vendors and agents love them and it could help you get a better purchase deal.

Also once you have costed the entire project and built in contingencies, and been approved for the finance then you can get to work immediately and not spend costly months waiting for additional finance.

5. Ask If You Are Unsure

Asking questions can save you from embarrassing mistakes. Ask experts, get information on your potential deal from everywhere possible including competing agents, local council, neighbours, builders, professional property inspectors, valuers, independent property information specialists, and the list could go on.

Financing The Deal

So the deal looks good and you have done your homework – like in any income generating opportunity (or business) you have to spend money to make money.

We have personal experience in renovating property. By talking to Portfolios we can show you how to structure the deal and in turn finance it to maximise your returns, and our friends at Renovating for Profit can show you how to make a lifestyle out of renovating investment property.

First things first fill out a portfolio review or give us a call and we will help you through the steps to making a good life out of investment property renovation.

Make It Happen – you’ll love it.

Paul Pritchett

Most Searched Terms: Portfolios Property, renovation for investment, capital gain, capital growth, Australia, Sydney, Melbourne, Brisbane, Newcastle real estate market.

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