Build Smart Renovation

Knowing whether to keep, renovate or sell your home is always a tough decision and really comes down to your own personal circumstances.

Build Smart Renovation Help you to increase your property’s value and rental appeal by renovating with our supply and install services, it help you turning your current property into a good investment.  

You could use it to buy your next home while keeping your old place as an investment.

There are a few reasons why you may want to consider turning your current home into an investment property. These include:

• Rental returns – An investment property offers a great way to generate monthly rental income. If the rental income is more than you have to pay to maintain the property, it means you’re positively geared and could profit from the rent you receive.
• Capital gains over time – Turning your current property from a home into an investment means you could continue to see it appreciate. This will allow you to realise any capital gains if the property market should improve in the mid- to long-term – something you can’t enjoy if you sell to buy your next home.
• Tax deductions – Keeping an investment property gives you the opportunity to claim tax deductions on your investment. For example, you may be eligible to claim any interest you pay on your loan as a tax deduction, as well as costs associated with maintaining the property.

What else should you consider with an investment property?

There are a range of costs that come with owning an investment property. Here are just some you should be aware of:

• Bill payments – As the owner of the property, you will still be responsible for paying certain bills, including utilities such as water, as well as council fees.
• Landlord insurance – You may need to pay landlord insurance, which can include building insurance, landlord contents insurance and property owner liability insurance.
• Strata fees – If you own an apartment, townhouse or villa, you will be responsible for paying strata fees that go towards building and common area maintenance.
• Real estate fees – You may need to pay property management fees if you use a real estate agent to manage your property on your behalf.
• Maintenance and renovation costs – Pretty much every investment property will require ongoing maintenance. And if your place is a little older, more extensive renovations may be required.
• Rent shortfall – If your home loan repayments and ongoing property costs are greater than the rental income you’re generating, then you will need to cover the shortfall.

Renovating your current home

There are some real advantages to carrying out renovations on your existing home. Renovating allows you to:

• Increase the value – When done right, renovations are often an effective way to increase the value of your home and sell it for a larger profit later down the track. Some of the savviest renovations include: a new kitchen, a second bathroom or adding another floor.
• Boosting rental income – If you’re looking to rent out your home, then smaller renovations can be a good way of commanding a higher rental income. You may want to talk to a local real estate agent to get their view on how your property could be improved and how you can give it greater rental appeal.
• Being happy where you are – Of course, if you plan on staying put, then updating your current home can be a great way to breathe new life into it and will give you a few extra years enjoying your time living there.

Setting your renovations up for success

A renovation is not a guaranteed money-spinner. However, these simple strategies could give you a greater chance of making renovations a success:

1. Set a budget – as part of your planning stage, it’s important to set a budget for your renovations. It’s hard to estimate an exact cost, but having a ball-park estimate will help you stay on track. If you think you need additional funds, reach out to your lender to explore your options. You may be able to use your existing equity to cover the cost of your renovations.
2. Avoid overcapitalising – ensure you talk to your local real estate agents and valuers to understand current value of your property and the likely value the renovation will add. If you spend more on the renovation than the extra value you’ll add to the property, it may not be worthwhile.
3. Do it yourself – for minor renovations such as a paint job, you could easily do it on your own. DIY is a good way to save money and get creative, but make sure you research the work involved to understand whether it’s something you can take on. No-one likes having unfinished work displayed around the house.
4. Plan and design – talk to tradesmen such as an electrician or plumber to understand the feasibility of your idea. Get quotes as well as delivery timelines and allow for some margin cost in case the work takes longer than projected.
5. Council approval – depending on your property type and the renovations you are planning, you may need council approval. The earlier you talk to your council the better, as some approvals can take a lot longer to be granted.

Selling your property

Selling your current property could be an ideal way to free up funds to purchase your next home and might be a smart option for the following reasons.

Managing one property is easier. Managing multiple properties can be stressful. Not only are you responsible for ongoing maintenance costs and topping up rental shortfalls, but there’s also the emotional labour of a vacant property, and sometimes, bad tenants.

Not having multiple properties also means greater clarity over the actual amount of money you have available to purchase your next home.

Finally, before you decide whether to sell your property, it’s worth calculating what it could sell for. Then work out other associated costs, such as marketing expenses and real estate agent commission.

It’s important to make sure that the costs associated with your property sale don’t outweigh the equity you have in your home. If there’s a risk of that, you may want to consider staying where you are and renovating or using the equity as a deposit instead.

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