Buying a property with renovation potential makes good sense.
It’s a way of increasing capital growth at our current stage of the
property cycle when we can’t really expect the same strong capital growth that we
have been seeing over the last few years.
But unless you have the experience and the skills don’t be tempted to do
a D.I.Y renovation.
Here are some thoughts on the good and Bad of DIY renovating.
THE
GOOD
Savings
If you’re willing to do the work, you can save some serious money, but only if
you have the skills and knowledge to achieve the right outcome, otherwise it
could cost you much more than you bargained for.
You can save on the builder’s margin and you can save shopping around for
materials. The trade-off is the time you spend doing this
THE BAD
A DIY project willtake longerthan you planned for in
most cases.
Yourcosts are likely to blow out,but you can avoid
this somewhat with good planning
You’ll need more cash.
Banks will often lend 80% of the cost of a fixed price renovation contract
provided by a builder, but won’t lend you the money to undertake a DIY
renovation.
You don’tknow what you don’t know – maybe it’s worth you
starting off with some simple DIY jobs like painting.
THE BOTTOM LINE
Renovating your investment property is a great way to:
Increase its value,
Make it more appealing to a wider range of tenants,(shorter
vacancy periods)
Increase the rent you can get for the property, and
Increase your depreciation allowances.
However, don’t
take on more than you can handle. If you have never done any D.I.Y work before,
start off slow (small jobs) and build from there.
RealRenta.com.au – Just A Better Way to
Manage Your Rental PropertyJason Gwerder
Friday, 24 June 2016
