|
|
 |
|
|
| |
| General Rule in Renovations | Pinnacle Wealth, 11/22/2004
As a general rule, you will make most money in property renovations
when the following applies:
1. The renovations / alterations will be highly
visible
2. It will dramatically improve the appearance
emotionally
3. The renovations / alterations are largely cosmetic
Residential property is usually an emotional decision for most people.
That's why hitting the right emotional chords are crucial to creating
wealth through property renovation. I only purchase residential
property to renovate if it meets the above criteria. Of course there
are many more factors that must be considered (61 in fact!) but if the
property doesn't meet this type of criteria initially then I don’t give
it any further assessment, I simply move on to the next project.
Let’s look at each of these 3 points in turn and discuss why they are
important.
Firstly, the renovation / alteration must be highly visible.
Residential property is largely an emotional decision (whether to rent
or buy). To get maximum bang for your dollar, you must aim for those
areas that have maximum emotional returns. For instance, the street
appeal of a property is absolutely crucial to its value. Why is this?
Simply because it is the part of the property that leaves a first
impression on the buyer or tenant and their friends and family. Buyers
and tenants want to feel good about their home and like most people,
they are concerned with what their friends and family think.
Street appeal can be improved dramatically by spending money on the
gardens, lawn and the front facade of the property. For instance, if
the property has an ugly face brick as a facade, rendering and painting
can make the home suddenly look much more modern and fresh. This gets
right to the emotions of potential buyers and tenants.
For the same reason, I keep clear of properties that need roof
renovations or repairs. Unless it is badly damaged (and visibly so)
roof repairs rarely add much value. The roof and roof space are out of
site and out of mind to most buyers and tenants and this means that it
is not highly visible and unlikely to add significant value.
Secondly, the renovation must dramatically improve the appearance
emotionally. Bathrooms and kitchens are great areas to renovate for
this very reason. A dirty or dated kitchen or bathroom has a highly
negative emotional impact on potential tenants and buyers. For example,
a mouldy bathroom ceiling can usually be fixed by a coat of paint and
the installation or repair of an exhaust fan. This type of repair makes
a dramatic improvement to the appearance emotionally, yet its cost is
relatively cheap.
The third criterion is that the renovations and alterations must be
largely cosmetic. Cosmetic changes are typically inexpensive to
complete and give the most visual impact to a potential buyer or
tenant. While moving a wall might make a room feel larger, the cost of
these types of changes usually outweighs the expected return. Another
reason to keep renovations and alterations largely cosmetic is that the
time and bureaucratic requirements are far less. If you are completing
a cosmetic renovation, such as painting and gardens, you are usually
not required to submit plans to your local Council or Shire, nor are
you required to submit plans for a building license (check the
requirements in your state and Local Council). If a building license is
required, it means more time to get the property renovated and in the
property game, time is money.
As I said earlier, there are 61 factors you must consider when
analysing a property for its renovation potential. The rules of thumb
mentioned here will assist you to easily eliminate those properties
that don't meet the criteria for making profitable returns.
If you would like to learn more about these topics and anything else covered in the Pinnacle Property Masters™ click here.
Article by Damian Collins from Pinnacle Wealth Property Masters Home Study Course.
|
|
| |
|
| More articles from the same publisher | |
|
| Go to main articles page |
Disclaimer: In providing investment products -
1. Moneybags Pty Ltd does not take into account the investment objectives, financial situation and particular needs of any person; and
2. Before making an investment decision on the basis of any investment products, the investor or prospective investor needs to consider, with or without the assistance of a securities adviser, whether the advice is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or prospective investor. |
|
| |
|
|
|
|
|
|
|
