Is it time to add value through renovations?

In recent years, buying a house in Canberra, Sydney and Melbourne was almost a guaranteed winner, as the three cities enjoyed a tremendous run of capital growth.

That may not come with the same level of guaranteed returns anymore, however, with predictions circulating that the markets are set for a price slowdown or in the worst case scenario, price corrections.

With that in mind, investors can add further value to their properties through renovations. The key is to have your renovation planned out before picking up the tools and not to rush into anything.

Do your research and due diligence to ensure that you execute a renovation that you are happy with and one that is ultimately profitable for your portfolio. A great way to start is to take a step back and ensure the right type of work is being done. If renovating an investment property remember it’s not your tastes you’re renovating to.

For first-time renovators, stick to basic, cosmetic upgrades, while for those more experienced having a strict budget is important to ensuring your project doesn’t become a money pit. A good rule of thumb is to spend less than 10% of the purchase price on your renovation. If the property costs $300,000 then limit your renovation budget to $30,000.

Avoid adding rooms, embarking on structural repairs or installing a pool, as these projects can be very costly.

While knowing how much you want to spend and what work you want done is important, the time of year you choose to start the work could also prove to be a money-saver. November and December are usually peak times for contractors, as everyone wants their project completed before Christmas, however, February is often slow. If you have the luxury, try to coincide work on your renovation with a quiet time then quotes may be cheaper and tradesmen are likely to be able to complete the job for you more quickly than in the busier times.