The Ultimate Guide To Renovation Course - Module 11: Impressing the Valuer

In this module, we'll continue to look at what happens after the renovation is completed. We'll look at how to gain access to the profit or equity that you've created and the best ways to use that equity to build long term wealth. We also look at how to select the right property manager or real estate agent to manage or market your property. It's also in this module that the two main strategies discussed in this course, renovating to sell and renovating to rent, will go their separate ways. In this module, we'll take an in depth look at both strategies and I encourage you to watch both. Even if you've decided on your strategy already, long before you started your renovation and even before selecting the suburb, you will have already made a decision on which strategy is right for you. Renovating to rent or renovating to sell. Now it's time to access the equity that you've created, either directly through selling the property or indirectly through borrowing against the property to fund your next project. Actually, some won't be able to access the equity or even want to. However, working out the end value of the property after renovation brings it full circle and allows you to look at the value you've created. After all, if you didn't make the profit you set out to, then you need to know before you go on to your next project. This is part of the Review, Repent, Repair and Replicate model that I believe you should go through after the completion of every sale and renovation. If you're just renovating so it's time to get a valuation. Getting a valuation at this time is not just for the renovate to rent strategy. Flippers can also use it too. By tapping into the new value or equity that you've created by increasing the loan, flippers may have the funds to get straight into the next purchase. All this while waiting for the property to sell or even pay off some of those invoices associated with this renovation. If you need to. People with the buy, renovate and hold strategy will be able to use these funds for the next property, perhaps using the revamping strategy in an existing property, perhaps as an evergreen revolving line of credit, which means you use the new equity to pay the interest on your existing loan, so you're not actually paying any interest out of your pocket each month. Obviously, this is an advanced lending strategy and one fraught with issues such as what happens when that equity runs out and you have to pay for the old loan and and the new loan out of your pocket. Can you afford it? The Valuer A professional valuation typically costs between $300 and $600. In most cases, this is included in your lender's fees. However, I'm going to suggest you hire the valuer yourself and have more input into this relationship if you can. After all, you are their employer. In some cases, it's possible to independently hire the same valuer who is used by your lender, which is handy as you know what to expect when going to the lender to apply to access that new equity. In theory, this could mean it's a less conservative valuation. Although valuers declare they are never told to give low valuations on bank valuations, some lenders also now allow upfront valuations at no cost. These are great, but remember who's the valuer's employer. In most cases, the bank will accept a valuation from one of their approved valuers which is less than three months old. So speak to your mortgage broker to find out more about this and about which valuer your lender actually uses the valuation, impressing your valuer. Having done all of this hard work to get to this point, there's no way that you're going to risk a valuation that is uninformed. So to give the valuer a little help, I'll be providing a comprehensive document that tells them everything they need to know about the property, as well as what I think the property is worth. You can find the valuation template in the bonus section. This is where all that suburb and property due diligence that you did in modules three and four pays dividends. First of all, it's very important to arrange a time to meet the valuer yourself on site. If for nothing else, this prevents a lazy curbside valuation, which can sometimes happen, but it's mainly so you can present to the valuer the valuation document in person and I get a chance to walk around with them and point out a few features as well. Remember, the valuers do five to ten valuations a day. They mostly have all the research done up front on what comparable sales are to your property. They know the area usually and they already have a figure in mind of the value. Hence this is just a double check for them. They're not going to know you've done a renovation and what has gone on behind the doors. So this is your chance to show them. Now a word of warning. Bank valuation systems are now mostly automatic. Once a valuation is ordered, a company is sent a notice to do the valuation. Now, if your loan to value ratio is below 80%, there's often little risk to the lender that the property value will drop below 20% and leave them with a mortgage that's higher than the value of the property. So in this case, they may organize a drive by or a desktop valuation. Now be aware you do not want this. They will not even know that a renovation has occurred. So you need to insist on a full valuation. Because all of these systems are automated. You need to get your mortgage broker involved in this. They will know how the system works and how to get a full valuation done, not just a drive by or a desktop thing version. You can't leave this to chance. Banks will not be happy if they have to pay for a second valuation without reason. And you won't be happy if you don't get the acknowledgment for the renovation you're doing.