How do you know when something is worth renovating? Relocation Relocation Australia hosts, Veronica and Bryce, have these tips.
Your essential checklist
We took Lauren and Clint to the house of horrors or otherwise known as a Renovators Delight.
Their offer was subject to a pest and building inspection, which didn’t stand up.
1 It’s essential to have the property looked at by an expert with the Roofing, Plumbing and Electrical in mind. These three items have the potential to be very costly.
2 *35 per cent of homes sold have some type of termite damage, timber fungus or dry rot so always have a building and pest inspection done on a property prior to purchase
3 If it smells musty and mouldy – you may have rising damp. Many homes built prior to 1970 don’t have built in damp courses or the original coursing would have failed by now within the walls. Temporary measures like painting can actually make it worse so have it looked at by a professional.
4 The older the structure the greater the chance that you will need to spend money on hidden areas, which will not have an immediate impact on the look of the property and, therefore, the value.
Lauren and Clint were able to make a careful decision once they had expert advice, which ultimately saw them pull out of the deal.
So it’s worthwhile outlaying the cost to call in the experts to protect your investment before signing the contract.
*(ref Archicentre, the building advisory service of the Australian Institute of Architects),
Invest with your head not your heart!
Clint struggled on the investment property search because he was unable to remove himself emotionally from the properties we looked at.
So when it comes to investing you have to use your head, not your heart
1 You are very unlikely to ever live in your investment properties so make sure you look to current and future trends.
2 Interestingly, what a Baby Boomer and Generation Y, for example, would deem as acceptable living standards can be poles apart.
3 Single people living on their own will be a dominant household type in the future so understanding and meeting the living needs of your market is more important than simply asking yourself “would I live here?”
4 Be clear on your strategy - do you want capital growth or yield i.e. income or both?
5 Are you a Speculator or an Investor? Are you hoping to find the next investing “hotspot” or do you prefer an area with a proven track record of capital growth over a long period of time?
6 Decide how you’re going to manage the property: Will you use a professional property manager or do it yourself (DIY).
7 Taking a DIY approach to property management can save you from agents commissions but there are lots of traps and potential problems
8 Property returns come from a tenant’s pocket so managing and finding good tenants is vital.
9 A good property manager is an important part of your investment team and will add value to your investments
Finally, take a considered approach when it comes to investing in property and remove emotion from the equation.
If the numbers stack up and you’ve done your homework it’s easy to switch hats and look at your investment without the attachment.