The home renovation business in Perth has become very competitive. A recent survey showed that 46% of WA homeowners plan renovations at some point in time. Among property investors, renovations are part of a strategy in which investors purchase properties and then add value to them. This increases rental value and resale value.
However, the sheer amount of home renovations being done in the Perth area has produced a lot of amateurs competing against professionals and coming out on the losing end. For a small investor, one bad mistake can keep them from ever becoming a medium sized or large investor.
A property that is overcapitalised or undercapitalised can derail a small investor’s dreams and put a crimp in those of a seasoned investor. The goal should always be to increase the value of the property by improving the living space to make it more enjoyable and increase demand. Here are some things to keep in mind.
Pay Attention to Your Target Market
Your renovation must be appropriate for your target tenant and must be in line with the rest of the building, aesthetically and thematically.
For example, if your beachfront apartment has a kitchen that looks like an afterthought, the people who can afford beachfront rentals may be put off by the kitchen. Conversely, if you are in a more family-friendly market with cheaper rents, you don’t want to put in a $50,000 kitchen because you won’t be able to make it up with the rental increase.
When you are starting out, avoid properties that need structural work. Instead, go with properties that need more of a cosmetic “fix.” It is a lot easier to modernise a kitchen or bedroom than it is to start tearing out walls. Make sure you know what you are doing before attempting structural work.
You should have your property valued before you renovate. The valuer will know the ins and outs of your neighbourhood and even your street. Make sure that you can turn a profit on the renovation before you begin. You also need a valuation after the renovation so that you can quantify how much value you added to the property.
After the first valuation, you can ask a real estate agent for an estimate of how much your home would be worth with renovations. You can also do market research yourself and look for “similars” to see how much your home will be worth. You can easily create a budget by figuring out how much of a profit you need to turn.
Price Matters, but Quality Work Matters More
Renovators who manage the project themselves often fall into the trap of giving the project to the lowest bidder, but this can be disastrous if the lowest bidder doesn’t know what they are doing. Hire tradesmen with sterling track records of producing quality work and finishing on time.
Do You Really Want to Do it Yourself?
Especially if you work, going the DIY route for renovations can take a lot of time and energy. If you aren’t an expert, remember that you are competing against people who are. You can’t afford to leave your results to chance.
You could hire a project manager, but by the time you do, you may be better off hiring professional builders instead. This frees you to do the work you do best, find other properties or just relax and have fun.
The main advantage to doing it yourself are that if you are astute, you can save money. The disadvantages, however, are numerous. First of all, there is no guarantee that you will actually save money by the time everything is finished. You are also risking substandard work that could cause you to lose a property.
Hire the Professionals
At Next Level Extensions, we always come in on time and on budget. We let you know exactly what your home renovation will cost before you sign the dotted line. Most of all, you can relax and leave the “heavy lifting” to us. Call 1300 948 094 today.