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The
Propertybuyer

Podcast

Hear the latest weekly insights into the property market via podcast by Rich Harvey, CEO and founder of Propertybuyer.

 
Fri 29 Mar '24 with Rich Harvey How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24 with Rich Harvey Why Invest in Melbourne?
 
 
Mon 26 Feb '24 with Rich Harvey Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24 with Rich Harvey Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 
 
Sat 27 Jan '24 with Rich Harvey Home Buying in the Eastern Suburbs – A personal journey
 
 
Sun 7 Jan '24 with Rich Harvey Economic and Property Market Outlook 2024
 

 

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Propertybuyer Blog
Property advice, market updates & more

 

3 profitable renovations you shouldn't overlook

January 18, 2016 / Written by Rich Harvey

 

By Rich Harvey, CEO, propertybuyer.com.au

If you're buying investment property, then there's every chance you'll be looking to secure a great rental yield. Unfortunately when it comes to Sydney, the abrupt hikes in capital values have come at the expense of rental growth. Even though CoreLogic RP Data recorded a 1.9 per cent rise in Sydney over 2015, it's still slower than it was a year before.

When your rent won't increase significantly on its own, renovations can provide an answer. They won't just boost your positive cashflow property, they can add to the base value of your home significantly. It's one way of manufacturing equity while also boosting rental income. So what are some of the projects you could undertake?

How about adding a bedroom? Would it be as nice-looking as this?How about adding a bedroom? Would it be as nice-looking as this? 

Adding a bedroom

The right addition to a home can produce great results for your base value and rental yield. Take adding a bedroom, for example. Data from the Real Estate Institute of Victoria shows that in Melbourne, the value difference between a three and four bedroom home can be several hundred thousand dollars - even about half a million in the city's inner suburbs.

The right addition to a home can yield great results for your base value and rental yield.

It's worth looking at for your Sydney investment property. Even the addition of a granny flat can significantly boost value, perhaps well beyond what you spend to set it up. The additional cashflow you get from having an extra tenant can also be indispensable.

Going open plan

A lot of suburbs around our city are dominated by older homes - some up to a hundred years old. Many traditional layouts have a kitchen tucked away at the back, or small living spaces and hallways. Knocking down some walls and creating a wide open space could be a great way to boost the value of your investment property.

Suburbs like Petersham and Ashfield in the Inner West, Edgecliff and Randwick in the east, and Willoughby and Narraweena in the north are great examples of this type of architecture. Bringing a somewhat dated home into the modern day with appropriate renovations could boost its appeal to tenants, but make sure you don't sacrifice the old-school charms of these properties either.

If you're renovating solely for investment, remember to use a buyers' agent as well. We can pinpoint areas that will get you the best return for your renovation dollars.

Create a kitchen dream

As I noted above, a lot of older homes have quite small kitchens. Instead of going open plan for living areas, you instead might want to focus on expanding on the culinary space in an investment property. Archicentre estimates that a full kitchen fitout can cost between $20,000 and $30,000, but you may only need to make subtle additions rather than conduct a full renovation.

Regardless, the kitchen is a focal point when it comes to value, and shouldn't be overlooked when you're looking to add appeal and value.

Is a kitchen makeover an appetising prospect for you?Is a kitchen makeover an appetising prospect for you?

Beware of the risks

Renovation doesn't guarantee profit. Overcapitalisation can see you lose money in the long run, and homes in different suburbs will be impacted differently by a renovation. You need to identify suburbs and homes where conducting this work will add the most value, which is where the expertise of a buyers' agent is of paramount importance.

On top of this, you need to work out an investment strategy. Sometimes refinancing to access equity is a better option than flipping a renovated home, so you don't have to pay capital gains tax upon selling. It's a complex issue, and one that shouldn't be taken lightly.

But one thing is for certain: renovations have excellent potential for boosting your property investment prospects. Contact a buyers' agent to maximise your returns through a tailored property plan.

The Propertybuyer
Podcast

 
Fri 29 Mar '24
with Rich Harvey
How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24
with Rich Harvey
Why Invest in Melbourne?
 
 
Mon 26 Feb '24
with Rich Harvey
Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24
with Rich Harvey
Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 
 
Sat 27 Jan '24
with Rich Harvey
Home Buying in the Eastern Suburbs – A personal journey
 
 
Sun 7 Jan '24
with Rich Harvey
Economic and Property Market Outlook 2024
 

 

Listen to many more
podcasts on our
Podcasts page.