Learn which renovations deliver the biggest return on investment. Kitchen and bathroom upgrades matter most, but even small touches like 'architect designed' signage can add up to 10% to a house's value. Focus on what buyers want, not what you like.
Questions this video answers
May 10, 2024.
As much as 10% to the value of a house.
Chapters
You've made it. Now this is where the fun really starts. In this module we'll go into detail of how to renovate for the best possible rewards. We're going to look room by room at how you can add value that is more perceived value than the actual cost. Also in this module, we are going to return to the property we inspected and undertake a real life cosmetic renovation from start all the way to finish. This is a great chance to apply everything we are going to learn in this module. But before we go to site, we need to look at the specific areas to add value. These are the ones that provide the greatest bang for your buck. Regardless of whether you are flipping or or renovating to rent, to access equity, you need to know exactly where the bang for your buck is. It's important to prioritise where the greatest value add can come from. For example, it's a well accepted principle in renovating that bathrooms and kitchens provide high value add outcomes. And remember, your goal is always perceived value, not the best or the most expensive item in the store. Adding more value than what it actually costs you. So getting the best bang for your buck is the goal. You know what I really like in a kitchen? Blood red glass kitchen. Splashbacks with grey tinted glass doors on my overhead cupboards. I also liked oversized chandeliers in my lounge room. In actual fact, I'm talking about my personal taste. Well, in actual fact, it's not really. This is wrong. The truth is, what I like in a renovation is not important. I'm 40 something years old. Do you think I share the same taste with my target demographic? First home buyers in their 20s? Of course not. I also wouldn't share the same tastes as retirees and downsizers, hopefully. Or for the opulent finishes found in old money suburbs. Your personal tastes are irrelevant. I cannot emphasise this enough. This is the part where even very smart, smart people fall short when making the mistake of renovating to their own personal tastes. In reality, they are using a very expensive investment transaction as a creative outlet. Be objective and question all of your purchase decisions. Adding bang for buck is only achieved through renovating to tastes of your target demographic, not yours. So where is the bang for the buck? Let's take a wander through the property and look at what we can do room by room. Start with the big ticket items. The kitchen. Most kitchen improvements usually offer high returns. The smaller your investment, the higher the potential for recovering costs. If resale value is critical, avoid budget breaking extras such as state of the art hob oven or premium countertops buyers will pay special attention to cleanliness, layout, scale and storage capacity. In other words, in dollar for dollar terms, these are the two areas that can produce meaningful returns on investment, but only if you give due consideration. Make sure that your design concept is top notch. Do not compromise on this. It is best to use a professional to do this. Did you know that architect designed on a real estate signboard can add as much as 10% to the value of a house? Make sure the working drawings are detailed and accurate. This will minimise costly variations Remember a cosmetic renovation strategy, not a full blown structural renovation, is mainly about a perceived value that is not the actual cost. So everything you do you should see a benefit that will drive an improved value or higher rental price. As we discussed in module 5, fixing the old roof, replacing wiring, re stumping or fixing white ant damage will only marginally improve the value, if at all. People expect these things to be right in a property anyhow. They are low or no return items. In other words, these are dollars spent without a direct reward or wow factor. Would you rather spend $10,000 on a fancy new kitchen or fixing the roof? So let's have a look at bathrooms. Renovating a main bathroom with new tiles, taps and fittings and keeping the drains where they were is a lower cost option to completely gutting the room and starting from scratch. You can even paint over tiles or use a special substance to paint baths. Look into low cost options that get you the clean and tidy look that you're after. Painting tiling walls and or painting ceilings is the least expensive way to improve your bathroom. Even something as simple as adding a new colourful shower curtain and a clean new toilet seat can make a difference. Renters may be looking for slightly different amenities than buyers. Consider adding the following tweaks to property to attract renters if you have a renovate and hold strategy, things like wardrobes, Internet, parking, security or furniture even. Generally we don't use expensive fittings and fixtures as renters don't always treat your property as well as you would. So we're looking at safe brands with really good warranties. We'll also learn to think bullet proof and address some high maintenance items. Essentially we're not after moving parts. Having said that, there are exceptions and that's when the target market expects expects that level of finish.
