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| Tips & Hints - Conducting a Property Renovation for Inspection | Pinnacle Wealth, 9/6/2006
In this edition, we will cover some of the renovation tips and tricks you must consider if you want to make huge dollars from property investment.
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 cords are crucial to creating wealth through property renovations. I purchase residential property to renovate only if it meets the above criteria. Of course there are many more factors that must be considered (61 in fact!) but if it doesn't meet this type of criteria initially then I won't even need to begin making any further assessment. 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 / tenant and their friends / 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 prefer to 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 criteria is that the renovations / 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 returns. Another reason to keep renovations / 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 we said earlier, there are 61 factors you must consider when analysing a property for its renovation potential. The rules of thumb mentioned here will help you to easily eliminate those properties that don't meet the criteria for making huge 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.
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