Is Renovating Your Investment Home Worth It?
There’s a tried and tested strategy for making money in the real estate industry. You buy property, you renovate it, and then you sell it at a higher price. But is this really something of a success story given by real estate agents who made it big, or is it no more than a myth?
Of course, when an agent tells you that he bought a property for $300,000, renovated it, and sold it for $450,000 12 months later, you’re more inclined to believe it and think that renovation is something that can be done to improve the value of your home.
There are some factors, or rather circumstances, that can make or break any property investment that follow the aforementioned model (buy, renovate, sell).
Consider the initial state of the property on your purchase
Let’s try to imagine that we just bought a used dwelling. Imagine this is a 3-bedroom dwelling with 2 bathrooms, a garage, and a decent yard. There’s a lot of room for improvement as far as the eye can see, but do you really need to improve the state of the property? Unless you want to unload it within 12 months, you’re looking at a masterpiece already. But for those of you who want to buy, renovate, and sell, you need to consider the state of the property before you even decide to follow the model. Let me explain. Renovating your investment home needs to be done with minimal costs if you want to maximise your ROI (return on investment). This includes having to understand the basic structure of the house, the wirings and plumbing fixtures, and even the land that goes with it. Trust me, you don’t want any unforeseen renovation surprises that will end up costing you a lot of money.
Consider the right time to do renovations
Time is a factor that can affect your ROI on renovations. Take the same house and put it in the suburb. It’s a competitive neighbourhood and it’s difficult to sell a house in that area. If you want your house to stand out from the rest, you need to renovate if you want to make money from your investment.
Consider your resources for renovation
Resources like your experts and finances can make or break your investment. It’s all about getting the most out of your investment, after all. The quality of work or advice that you can get from your chosen experts will affect your ROI. If you paid too much for a simple renovation task, you’ve already lost a lot of money. Your resources are also in line with the initial state of the property. Your reliance on the experts’ services will be determined on how well you know the property and how well you know what needs to be changed to maximize your ROI.
There’s never a good or bad time to maximize your ROI when it comes to buying property. It all boils down to the factors that can make or break your investment. Your decision to renovate should be based on whether you’re in it for a short-term increase or a long-term increase on your home’s value.