Should I Renovate to Sell An Investment?

Source: Sarah Ackerman via Flickr

If you are thinking of selling an investment property, you’ve no doubt wondered whether you should renovate first. If it’s your first time, be warned. Renovating a house or a unit is not a simple task, and not necessarily a guarantee to bring in a higher price. Whether you are planning to do up an entire house/unit or just make a few touch-ups, there are some important things to consider.

The first thing you need to ask yourself is “am I better off selling as it is”? The answer is not always “yes”. To start, get a realistic appraisal from a reliable real estate agent, or if you can, an independent valuer. Although you do not need to base your decision solely around this, ask the valuers opinion on whether or not they think the renovation is worth your while.

Ideally, your agent should be able to go through recent sales with you and show you which similar properties have made bigger sales after renovations, and which haven’t. They should be able explain to you why you’re better off renovating, or why the property is unlikely to increase substantially in purchase price. Remember, an agent you have a good rapport with is likely to be the one selling your house, so it’s in their own best interest to give you good advice as well. Be cautious, some agents may just tell you to put the property on the market to get a quick sale. Make sure you do your homework and research whether there are similar properties in your area. Are prices going up or are they going down? Is there more or less on the market now compared to what there has been in the past?

Once you have an idea of how much the property is worth as it currently stands, consider whether you realistically expect to receive more money from the sale after renovating. If you do, how much more? Obviously, you don’t want to lose money. The worst outcome is to put extra money into the property which you will not receive back from your final payout. This is not unheard of. It is also important to consider whether the ultimate profit of the sale, including added renovations, will be worthwhile in relation to the time and energy you will have spent in the process. Renovations are no easy feat, and whether you plan to have it carried out via work of professional trades people or use some DIY skill, these things still take time and money to organise, and can be a stressful process.

Following on, who you have carry out your renovations should you decide to go ahead with them is a really important decision to make. You may think of yourself as a bit of a handyman or woman, but do you have the skills and experience to complete the work you need done? A big job can go from a fun project to a headache very quickly. Consider sharing the workload – doing the parts you’re confident in is a great way to cut back the overall costs of the renovation, and leaving the tricky stuff to the professionals will greatly reduce the likelihood of unexpected costs that can unfortunately occur with inexperience.

If on the other hand, if you would rather leave it entirely to the professionals, ask around. Seek out recommendations and advice from friends who have undergone renovations and have had good experiences with trades people. Positive word of mouth should steer you in the right direction and away from anyone with a reputation of being unreliable.

Our suggestion is that you consider doubling the time frame you’re allotting for your renovation, or at least allowing yourself a substantial amount of leeway should the time you need to complete your renovation run longer than planned. These sorts of projects are prone to the unexpected occurrences that require additional time, as well as money. Always seek out realistic quotes on all the materials and work your require done. Then, as a rule of thumb, add on an extra 50 percent of this total to factor in the costs of the unexpected jobs that are more than likely to crop up once the work begins. If you’re under budget – great. But the last thing you want is a half renovated house that you don’t have the funds to complete.

First impressions are everything – especially in real estate. Front of house is very important, so spend some time cleaning your windows and invest some money in tidying up the gardens and hiring a high pressure washer to clean gutters, concrete and anything else that could do with a good wash. It will make a world difference to your property. Paint the front door and replace any rusty gutters and down pipes. A simple spruce up is easy work and can take years off the appearance of you property!

Another point to consider is the size of the property you plan to sell. Houses are generally more of a challenge to renovate than units, which are usually a great deal smaller, so for an overall renovation they can be completed much faster. Aside from this point, the fact that the body corporate will often look after the outside of the house greatly reduces the additional work you would need to do.

If you don’t intend to do up the entire house, think about what areas you will renovate. The areas that tend to have biggest impact on buyers are kitchens and bathrooms, which just so happen to be the trickiest jobs. When you consider the work that needs to go into these rooms, like plumbing and cabinetry, it would be ideal to get a professional in to help you tackle them. As mentioned earlier, bringing in the pros will increase your budget, but you can expect these extra expenses to pay off in the end. Buyers look to these rooms above all others, so you want to present them the best you can.

When considering renovations for the rest of the house, the best advice is to avoid anything drastic. Stay away from feature walls and anything too out of the ordinary. What you might think is quirky or creative could be a big turn off for your potential buyers, and could dramatically reduce your market. The artistic types out there won’t like this, but do it for the masses! The more neutral the décor, the more you appeal to a greater audience. To begin with, think about high gloss kitchen doors and bathroom cabinetry. Antique white USA is a good neutral colour, and beige/brown carpet with warm timber floors and tiles will give it a bit of offset. Stainless steel appliances and taps look smart and stylish while maintaining that neutral décor.

Should you decide to go ahead with renovating your investment property to sell, you want to do all you can in order to aid the buyer in being able to picture your home becoming their own – think of it as a blank canvas!