Can you still make money renovating property?
The short answer is of course, but more than ever you have to know how to do it the right way.
In years gone by you could buy a property, mess up the renovation [spend too much, take too long, deliver poor quality] and still make a heap of money! Thanks to double-digit property price growth even a sub-standard renovation could turn you a profit.
These days it’s a different story – despite interest rates being at record lows the property market in Adelaide is soft. While no one can accurately predict the future it’s fair to say the days of booming property prices in Adelaide are gone, for now at least.
As a result there’s a real chance your property investment/s could actually lose you money – such that the costs [interest, taxes, insurance, maintenance etc.] associated with holding your property out way the return [rent and capital growth] you receive. After all without capital growth a negatively geared property is effectively a property that loses you money week in, week out!
Rest assured we haven’t turned anti-property and we’re not advocating that you go and sell all of your investment properties. After all property should always be viewed as a medium-long term investment – historically markets always turn around and higher capital growth returns. The question is what can you do in the meantime to maximise your property investment returns.
It stands to reason that if you want to outperform the market you’ll need to be proactive – and the way to do this in many cases is via property renovation.
As always the goal of renovating property is to add more in value [rent and capital value] than the actual cost of your renovation.
Imagine for a moment that you could click your fingers and have your property look brand new again? Would your property be worth more? Could you charge more rent each week and attract a better quality of tenant, who you know will look after your valued investment? Could you even access your newly created equity to buy more property or perhaps use it to enjoy a better lifestyle?
Here’s what you can do…
You may recall we’ve worked with Andrew on a number of property renovation seminars over the years [you can see some examples here] The goal of these seminars was to teach people how to find, buy and renovate property for maximum profit. We’re really proud of the results our clients have achieved implementing Andrew’s simple but very effective renovation strategies – for some it’s truly been a life-changing experience!
These days Andrew conducts one-on-one mentoring for people who want to learn his unique property renovation system and he tells me his students are getting even better results.
What many people don’t realise however is Andrew is also a qualified builder and project manager. What this means is that you can also have Andrew organise and complete your renovation project for you – he’ll design, organise and project-manage everything, delivering your finished product to the highest standard, on time and on budget. In fact, he usually does so with time to spare and money saved.
Imagine a brand new fit out, all done for you in only 5-6weeks – and you don’t even have to lift a finger!
If you’ve renovated before you’ll know the headaches involved, from the concept, the budget, materials, and most importantly, the right people to do the job. While DIY sounds good in theory, in most cases it’s a false economy. Savings in labour are often offset by increases in costs and stress levels and a reduction in overall quality. Most importantly, as an experienced property renovator Andrew knows where and how to spend the budget in order to give you the best return for your money.
Don’t need a full renovation? To achieve the maximum return on your investment it’s usually best to complete a full internal renovation however, if your property is in good condition then a brand new kitchen and/or bathroom will get you a great result!
- Increased rent – decreases your holding costs and improves your overall investment return!
- Lower vacancy – your property will rent quicker as well as attract a better quality of tenant
- Less problems – have virtually no maintenance costs because everything is brand new! [for home owners too]
- Increased equity – increases your overall net wealth and helps you buy more property or enjoy a better lifestyle [for home owners too]
- Easier to sell – your property will be more appealing to buyers and attract more purchase enquires [for home owners too]
- More profit – your property will sell for a higher price giving you a larger profit [for home owners too]
The proof is in the pudding! Check out the following results from a simple renovation of an investment unit in Adelaide;
|Value Pre-Renovation||$350,000||Renovation Cost||$35,000|
|Value Post-Renovation||$425,000||Reno Loan Interest||$1,750|
|Equity/Value Gained||$75,000||TOTAL COSTS||$36,750|
|[21% increase]||TOTAL GAINS [equity + rent]||$79,680|
|Rent Pre-Renovation||$320 pw||COC RETURN||217%|
|Rent Post-Renovation||$410 pw|
|Income Gain||$90 pw [$4,680 pa]|
Note: Renovation loan interest costs are based on borrowing $35,000 at a rate of 5.00%
The Result – a huge 21% increase in value [$75,000 in new equity], a massive 28% increase in rental income and a whopping 217% return on your total project costs. Overall the property has now become a better investment – it’s worth more and it produces more income which will help minimise or even neutralise any associated property holding costs.
What Kate said about working with Andrew;
“From first meeting Andrew to having my unit fully renovated, I can definitely say that he was brilliant to work with – the words easy, timely and professional come to mind. From settlement, Andrew started the renovations, kept me informed, and consulted me on any changes/suggestions along the way. The end result speaks for itself, it looks like brand new! I am very proud to be the owner of this great investment unit. I can’t wait to buy my next property and renovate that one, with Andrew leading the way.”
Kate W, Ashford SA
If you are interested in finding out more about Andrew’s private mentoring program or you’d like to get a free property renovation quote please contact Sam on 0411 431 391
In addition to being very approachable Andrew is also a very transparent operator and is only more than happy to show you real examples of his work and results. Keep in mind that as a boutique operator Andrew’s only able to work with a small number of people each year so if you’re interested in working with him make sure you call him for a friendly chat.
To your success,
Sam & Matt
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