Even if you stand firm in belief that the next renovated property will remain your home for life, you should still be able to make a profit of the renovation. Luckily for you, even the most ambitious renovations can increase the value of your home if you follow the rules listed below.
The worst house on the best street
If you’re hell-bent on renovating for profit, apply the experienced house flippers always use. Buying the worst house on the best street gives you maximum space to add value. In its current condition, the property is likely to dissuade a lot of prospective buyers, which should reflect in its price.
The street will remain the same, but you as a renovator can do a lot to transform the house completely. However, keep in mind that most of the profit is made in the purchase itself, rather than what you do to improve it. So, you’re looking to pay as little as possible, by grasping a potential that others haven’t spotted yet. In these situations, unless you’re buying a big house, the potential margin for profit is tight, and you need all the experience you can get.
Tackle the essential first
When it comes to prioritizing your budget, it’s too easy to spend the money on the kitchen, bathroom, the flooring, and decorative finishes. However, when an experienced valuer comes, they will see straight through those bells and whistles and inspect the state of the property itself.
If your budget is limited, you should always corral the money for the essentials. Make sure the building is warm, dry, and free of damp and mould. Check if the roof needs any maintenance and increase the security of the entire property. Finally, if the house needs rewiring, you better hire someone to do that before you’ve finished decorating it.
Follow by energy efficiency
While major structural enhancements should be your first aim, the next phase should be the building’s energy efficiency. The good thing about energy efficient technologies is that you can capitalize on potential savings of each feature, as well as increase the total property worth.While they might not be the reason why someone chooses your house down the road, it might make the difference in a final showdown between two options.
On the other hand, if the house has old doors and draughty windows that leak heat straight out, rest assured the potential buyers will ask a discount on the target price. In this time and age, homes that haven’t been renovated for energy efficiency are simple more expensive to maintain and live in.
Enlist professional help
Properties in attractive neighborhoods are expensive, with even the worst homes coming with a hefty asking price. According to an international housing affordability survey from 2016, Australia is ranked the third most expensive housing market on the world, with Sydney listed as the second most un-affordable city housing in the world, followed closely behind by Melbourne at the sixth.
In such cases, you need all the help you can get to land a property suitable for renovation at a reasonable price. Unlike in many other parts of the world, home buyers in Australia don’t hesitate to enlist a property buyers agent from Sydney to help them with negotiations and offers. In addition, buyers agents know homes in their area inside out, often pointing out to seemingly insignificant details, which you can use for leverage at striking the great deal.
Install central heating
Adding or updating the central heating system is a renovation project that always adds more value to the property than it costs. Most buyers and mortgage valuers even consider it essential when estimating a potential house.
Adding central heating to an average three-bedroom Victorian or Edwardian house costs between US $4000 and US $5000. Keep in mind though, that adding or improving the building’s heating system is worth little without improving the general energy efficacy of the building. If the existing boiler is in working order, try to keep it, unless it’s the type that draws its air intake from the inside of the house. If the boiler capacity allows it, consider adding an underfloor bathroom heating to the existing system.
Include a few remodels
Once you’ve made the home structurally sound, warm, dry, and damp-proof, you should focus on making the best use of the available space. An extra bedroom will prove as a great benefit on the future market, just keep in mind to consult the local building code to see what constitutes a bedroom. The general advice is to try to convert the space that hasn’t been converted yet, for example a loft into an entertainment room or a home office, or cellar into additional living space.
Renovating for profit boils down to several projects that require discipline and few emotions. Allow rushed or impulsive decision, and your budget is spent before you know it, however if you stick to the budget and plan every step with priority on mind, the end result can prove extremely rewarding.