How to Renovate an Investment Property without over Capitalising

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February 21, 2017 at 2:30 am

Buying property as an investment has never been more competitive for Australians in the property market. Before considering renovating an investment property to increase your investment yields; here are some tips of how to renovate an investment property without over capitalising?

Over capitalisation occurs when investors pour too much money into their properties in the short term, this could mean a loss once the property is on sold, making it a great buy for the new home buyers but not so great for your investment bottom line.

So how do you avoid over capitalisation on your investment property?

  1. Start off by creating a budget, how much can you afford to spend on this property? By setting out a precise and rigid budget it will help you to avoid spending too much on the property.
  2. The next step is to make strategic decisions in your renovations; renovations often increase the value of a property and is an excellent choice to increase yield benefits, by customising the property to your own taste you may limit interest and deter potential renters or home buyers later down the track.
  3. Kitchens and bathrooms are always a good place to start renovations, by increasing environmentally friendly features such as solar power, water tanks and green energy sources are becoming popular with potential tenants or home buyers.
  4. Consider the area in which your property resides? Often properties will have a ceiling value based on the area in which you have brought.
  5. Another important measure to avoid over capitalisation is to have the property independently valued. Having the property valued before the renovations will help you spend less overall.  And gain professional guidance on your investment.
  6. Lastly, the old saying “less is more” can never be truer, tenants and home buyers are looking to create their home and personalisation, not buy into someone else’s taste and lifestyle.

At Group AMS we have experienced home renovation professionals who can help you complete any project, to any budget with efficiency and ease. Contact us today for no obligation quote, click here.

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