Jane Slack-Smith on renovating for value: focus on cosmetic fixes and layout changes that add usable rooms, target properties the market has written off but with solid structure, and brief the valuer directly so they see the improvements and recognise the post-renovation value.
Chapters
Well, when I'm looking for a property to renovate and doing a walkthrough and an initial assessment, there's a couple of things that I look for because, you know, I really want to use the minimum amount of money to add the maximum perceived value. And I think that's the secret to renovation. And so what I'm going to look for is things that. Or twists that I can make. So maybe add an extra bedroom in the current flow floor planned without doing a structural renovation. And within an area where I don't need to go to council to actually have that approved, I might also look for. I love it when I'm walking into a property and I hear people as they're walking out going, oh, my gosh, that's terrible. Did you see that? Oh, the smell or the colour. There's a lot of things that scare people off and they don't have the imagination to actually think, you know, a bit of elbow grease or a little bit of paint could actually fix this up. So I'm looking for those properties that the market has kind of said written off as well. So I think there's also a lot of opportunity, when you're looking at cosmetic renovations, to actually just look beyond the grime, look beyond the floor plan and look at the actual structure. And the importance to me is making every single dollar count in the eye of the valuer, because the valuer is the person who's going to come through and validate what. What the end value of the property is, which is going to allow me to pull out equity. So if I have to put money into fixing up the gutters or fixing up pest and building issues, then that money's not going to be seen. And that's what I'm really looking for, problems. So I've done most of my research before I even hit the property. So I'm just validating, actually. There's no unseen or unsightly or big problems that I could be missing out on. Look, it's really important, if you've done all the preparation in finding the suburb, the property, and then put in your blood, sweat and tears into renovating the property, that you don't just stop there and it's really important that you then continue in the process and release the equity or have the valuer value the property at what you want it to be valued at. So it's really important that you don't just relinquish the responsibility of the assessment of the valuation to the valuer. Now, as a mortgage broker, I know that There's a lot of systemisation in the banks these days with valuations, so a lot of valuations are done as curbside valuations, which essentially means that the valuer doesn't walk through. It's really important that if you've done a renovation that the valuer walks through, because all they have to assess of what the property is is what you bought the property at and what the comparable sales have been recently. So you really need to do work. So work with your mortgage broker and make sure that maybe you have to indicate that the loan to value ratio is higher to actually push it into the system that allows it to have a full valuation, but you need to get that person walking through there. Now, I always make sure that I'm the contact for the valuer, not the real estate agent, not the tenant, because I want to speak to the valuer. Even if I'm not there or not in that state. I want to coordinate that meeting and give them some extra information. Honestly, if you employ your valuer yourself in the beginning, you're probably looking at them walking through and validating their own research and spending 12 minutes in the property. If it's a bank valuation, it's probably more like seven minutes. So you need to make sure that everything just looks right. All they're doing is, I guess, is confirming their thoughts on what the property is worth. Now, most valuers work within two to three suburbs. They've seen so many properties within that area, they've done the research before they turn up. I also have a template that I give to my students that they fill in that pretty much summarises all the information about the property, the improvements that have been made. I usually get a rental assessment by a number of real estate agents. Grab a magazine and go to the data bank at the back of the magazines and they'll tell you what the rental yield is so you can estimate what the value of the property is. And I also give them some comparables. So I physically go out there with my tape measure and I'll measure the front measurement of the property and the side measurement and give some indications of what a property's measurements are, are they superior or inferior, and give some commentary around recent sales as well. Valuers often only have the sales that are available to them through RP data or real estate agents. They're not always up to date with the most recent sales. And in a rising market, you don't want them to use three month old data. So if you do know of recent sales in the area, make sure you let the valuer know. Let them know the price, the settlement date, the real estate agent, and make it easy for them. Give them the real estate agent's phone number so they can ring them and actually validate that sale. Because you've done so much work and there's no point in you just dropping the ball at the end because this is really what you're doing everything for.
