A full structural overhaul can certainly add value to an investment property, but it is not always necessary for you to make a good profit. Even cosmetic renovations can boost the perceived value of a property and ensure that you get a good profit from the project.
I have learnt some tricks of the trade over the years I have been running my renovations business. They have helped me to maximise the profit I make on my renovation projects. Let me share my top five tips for getting a good profit from your renovations:
#1 Add New Bedrooms or Bathrooms
Adding an extra room such as a third bedroom or a second bathroom will add value to the property and increase your profit. When you do this it is important to maintain the balance and the flow of the home.
One of the things to consider is the number of living rooms there are. If you add a bedroom to a two-bedroom apartment, a single living space is fine. But if you add a bedroom to a three-bedroom apartment, you will need to add a second living room too.
#2 Achieve Good Flow With A Good Floor Plan
Too many doors leading into the kitchen, living spaces that are not close to the kitchen, or bedrooms that are not in the same part of the house, lack a natural flow. Homes in which the flow is messy are less attractive and will put a dent in your profits.
To get a good profit from your renovation it is important to approach the flow of the home holistically. Using the kitchen with too many doors leading into it as an example: The kitchen will look disjointed with the rooms that are connected to it. Not only that, it will limit the amount of usable space you have available in the kitchen. An alternative option is to open up the wall between the kitchen and the living room to ensure good flow. You could use an island bench to create a more inviting space.
#3 Perceived Value vs. Real Value
There is a difference between the real value of the property and the value perceived by your buyers:
- Real value: The cost of the renovation.
- Perceived value: What the buyer thinks the property is worth.
Your profit is determined by the choices you make during the renovation that affect the perceived value of the property. You may choose a good quality paint, but the colour does not appeal to your buyer. When this happens you increase the real value of the property but the perceived value takes a knock.
#4 Reuse Whatever You Can
Avoid unnecessary gutting. You will increase your profit on your renovation if you don’t remove things that can be reused. Your builders may try and talk you into gutting the property and starting again from scratch. It is often unnecessary and increases your costs.
#5 Styling Is Essential To Get A Good Profit From Your Renovation
Adding furniture, curtains and decorative items to your renovated property makes it look and feel more like a home. It can increase the value of your project by as much as 10%, helping to ensure that you get a good profit from your investment property.
Keep these five tips in mind when you are working on your renovation projects to make sure that you get a good profit out of each one.
At The School of Renovating, our mission is to give you the tools and the inspiration to experience all the joy, creativity, and profit that renovating has to offer. Check out our free resources to get you started on your renovating business journey.