Investment property renovation strategies.
That word ‘budget’ makes some people cringe, but what is a budget really? Just a list of numbers so that there is a ‘road map’ to work with.
When budgeting to renovate the first item on the list should be the $ value that is going to be spent on the project.
This may be calculated from:
- how much money can be accessed to pay for the renovation
- what the property should have spent on it to achieve the end result
- evaluating if the property is going to increase in value from the renovation
- how old or new the property is
- whether the property is going to be sold after the renovation
- if the property value increase is helped or hindered by the local property values
- and of course, there are other considerations too
After establishing just how much could be spent on the property, the next question then is “how much should be spent on the property?” which is not necessarily the same as what is available to spend on the property.
As a property investor becomes more and more experienced they will be able to cut a few costs, will have a better idea of what will give the better returns and all in all, as a general rule (not allowing for hidden problems), they can estimate the final cost reasonably accurately.
This all relates as to whether the renovation is going to be:
- a ‘budget’ renovation which is really more of a face lift
- a moderate renovation where some items may actually be replaced like stove, water cylinders, window frames, doors etc
- a major renovation which would include adding or changing rooms and bringing the whole property into line with a major facelift
Like any job breaking the steps of a renovation down into smaller steps will allow the job to be done with less stress, it will be less of a challenge (hopefully) and probably will mean less mistakes along the way.