Renovating for Profit

 

Have you noticed how the values of assets nearly always fall after you purchase them? Residex CEO, John Edwards explains why housing is different.

 

New cars lose a percentage of their resale value the minute you drive them out of the showroom, and it’s the same with boats, trailers, caravans and most other personal assets. While investment assets such as shares don’t automatically lose value just because you buy them, it often seems to happen.

Once your new car is on the road, or that new boat is in the water, there’s nothing you can do to raise their value back above their purchase price - in fact, there is only one asset you will ever own that can rise in value due to your own efforts – and that is housing. Older houses lovingly restored to their former grandeur will always fetch more than their original purchase price.

 

Improving the value of your property is easy

 

 

Buying a property is usually an emotional decision yet it is also the biggest financial commitment most of us will make in our lifetime. It makes sense to buy a property in need of some improvements and sell your property when it looks at its best.

 
Even better, you can improve the value of your property quite easily and effectively, and you can even buy older properties in need of a facelift with precisely such a goal in mind. Then, when you sell them you can experience the reward of a tidy uplift in price, and if you have been living in the property, the increase in value is tax free. Even though the housing market presents investors with realistic and secure ways of achieving good returns, this is not always the aim of someone who wants to live in their own home. Even so, there is every reason to keep this unique benefit that housing presents in mind when you buy your next property.   

 

 

Anyone can undertake some form of property improvement

 

Most owners think that renovation comprises major structural improvements requiring architects, council approvals and involving heavy financial commitment and risk, but in fact virtually any owner can undertake some form of property improvement. Freshly painted walls, new floor coverings and utility area uplifts will attract more buyers. With the eventual sale in mind, it is important to improve areas that add to the property’s visual appeal, while leaving problem areas that are not immediately visible alone as they will not detract from the property’s sale price. Other tips for improvement are house gardens and unit balconies where simple arrangements of hanging flowering plants, a sparkling water feature or an attractive new garden furniture setting will add instant value to those all important first impressions.      

When you are buying a property with some renovation in mind, it is important to restrict your search to streets with the highest price distribution ranges. This is because there is little point in spending money on any renovations that go beyond a simple makeover in streets where every property has the same appearance and value.

 

 

Choose the right property in the right street when buying

 

The worth of the best property in a street sets a benchmark against which the prices of all other properties in the street will be measured, and if there is little price difference between the best property in the street and the worst, your opportunities to achieve uplift in value are severely limited. Buyers wanting a better property will look in other areas where there are many such properties, rather than selecting the one property whose appearance and attributes clearly place it out of kilter with the others in the street.

Having selected some suitable streets, the next step is to look for listings at the low end of each street’s price range. Whether you are proposing to undertake cosmetic improvements or major renovations, your aim is to lift the selling power of your property when compared to the others in the street. The lower your property rates in the street and the greater the range of prices, the higher the potential price will be after you have completed the improvements.

 

 

Residex can identify the best streets in any suburb when you use the listings in homesales to find properties at the low price end of the market. Residex’s new report for renovators, called the Renovator$ Dream Helper provides a wealth of information for any suburb you are interested in, including suburbs where you currently have a property. The report gives you a complete summary of the housing market in each street in the suburb including growth history, rents and sale data. Residex includes suburb predictions for the next 5 and 8 years. There’s even a complete street index for the suburb, showing the median value of each street.

 

 

The summer holidays are a great time to have a look around your property and start those long awaited repairs and renovations. Using Residex’s Renovator$ Dream Helper you can make improvements and undertake renovations with confidence, because you’ll know what the uplift in value is likely to be when you list your property on homesales.

 

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January 2011