When to reno?

Discussion in 'Renovation & Home Improvement' started by spludgey, 19th Aug, 2015.

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  1. spludgey

    spludgey Well-Known Member

    18th Jun, 2015
    I have never done a reno on any of my IPs, other than fixing what was required.

    While I think that my goal of being able to retire in seven years is achievable without doing any value add, I've always been interested by the idea somewhat.

    I've got a fair bit of experience with renovations, as my parents (cheapskates) used to always buy fairly rundown houses to live in and then we'd renovate them. I also renovated my sister's house together with my dad and helped renovate my ex-mentor's IP.

    But that's somewhat besides the point. What I'm interested in is when and where do cosmetic renovations actually pay back on high yielding properties (has to be over 7% after renovations)?
    To me it seems that the best time would be when the market is flat and has been for a while. When the market is going up, valuers appear to be reluctant to give you full market value when your property is being revalued.
    I've run rough numbers on places on the Central Coast a while ago and it seemed that the margin wasn't really worth it. But obviously people are doing it successfully, so when and where are the best opportunities?
    Hanison and mcarthur like this.
  2. Top cat

    Top cat Member

    23rd Jun, 2015
    From my experience the best time and only time I have renovated is when I could improve the rent. For example the last two renovations I have been able to improve the rental income by $50 a week and get better quality tenants.

    And the property Getting revalued to pull equity was a way I can keep moving forward.

    I have also ran numbers on a property I am holding in the logan area, where which a reno would not be worthwhile.

    I guess as the market changes it May become worthwhile to renovate in these areas.
  3. Reno Crazy

    Reno Crazy Well-Known Member

    3rd Jul, 2015
    You are doing the right thing running the numbers because it may not be viable or cost effective depending on the area. I have renovated to differing levels all of our IP.

    I recently renovated our Perth unit I spend $15K on cosmetic reno, the issue was no one was looking at it and I was going to need to drop the rent and then it would attract the less then ideal tenants. The reno worked I kept the rent at the previous rate and it was rented within 2 weeks. Properties available for rent were increasing everyday, so I was happy with my decision to reno.

    I have 2 properties in the same suburb in outer Melbourne the blocks are exactly the same size, houses are the same size one is renovated to a high standard the other is not the difference is $30 per week. The not so well renovated is a way better yield as it was cheaper to buy. The funny thing was that they both went up for rent recently at the same time, the people that rented the cheaper one went to the more expensive one and thought the cheaper one was better value.
  4. Special order

    Special order Well-Known Member

    7th Jul, 2015
    Bought one in Logan roughly 6 months ago for 265 was tenanted for 350, once we exchanged contracts, we dropped the rent to 310 as it was one week until Xmas and filled it straight away. Just finished a 15k Reno and sale val is 360+ but struggling to get the rent over 370 for this one, however lots nice equity to pull