Key Facts

  • Renovations could bring up to 200% return on investment if done right.
  • Lower house prices and stabilizing material costs may be leading to a resurgence in renovations.
  • Location of the property and type of renovation (cosmetic or structural) can significantly impact the sale profit.
  • Moving plumbing and undertaking significant structural work may also yield profitable results.
  • First-time renovators often overlook additional costs like GST, tax, and mortgage repayments.
  • The main selling points in a renovation, according to Mark Trafford, include modern, clean features and family friendly elements.
  • A good renovation team should include tradespeople, an inspector, a lawyer, a mortgage advisor, and an accountant。
  • Interest rates, which have been high recently, may decrease in the second half of 2024, which could give a boost to renovation projects.

Article Summary

While renovating rundown homes can potentially yield high-profit margins, there are many variables affecting the return of investment, from the type of renovation to the property’s location. Renowned property mentor Jono Frankle suggests that successful renovation should add value to a home and advocates not limiting purchases to those requiring only cosmetic work.

Additional costs often overlooked by first-time renovators, such as GST registration, tax, and mortgage repayments, can have a substantial impact on the profit margin. Seasoned renovator Mark Trafford emphasizes the importance of knowing the total costs before starting the renovation. He also mentions the importance of modern, clean, and family-friendly features to increase the property’s attractiveness.

A successful renovation project requires a competent team, including a thorough building inspector, an astute legal professional, an accountant, along with tradespeople and a mortgage advisor. Experienced renovators are usually more successful as they have a better understanding of the costs, variables, and potential selling price.

Current high-interest rates are seen as a partial obstacle to profitable renovation projects. However, Garreth Collard of EpsomTax.com predicts the interest rates may drop as soon as mid-2024, which could provide a more conducive environment for renovation investments.

Source Link: To read the full article, click here.