How Do You Effectively Renovate for Profit

Renovating has long been seen as an easy way to maximise a property’s value and drive additional capital growth. This has been reinforced by multiple TV shows depicting renovations as a kind of “get rich quick” scheme. But trying to renovate for profit is not as easy as you may think.

First, you need to find a property with great potential and an even better purchase price. Then, you need to plan updates that the local market will love and – most importantly – pay a premium for. Finally, you need to make those updates, sticking closely to a modest renovation budget, while still creating a high-end feel.

That said, while this is difficult to do, it is definitely not impossible to renovate for profit. In fact, for those that know what they are doing, there is real money to be made. And here are a few of the simple tricks they use to maximise their returns.

Knowing where to focus your investment

As with any property investment decision, the key to renovating for profit is research. In particular, it is important to understand what people (both buyers and renters) expect from a property in your area. You should also look into which features increase the value of a property like yours the most.

While there are no guarantees when trying to renovate for profit, a few activities will almost always add value. This includes:

• Repainting and updating fixtures: This is the quickest, easiest, and usually cheapest way to make a home feel more modern. To create the broadest possible appeal, stick to a neutral colour palette and choose simple, sleek fixtures (lights, handles, etc.).
• Opening up living spaces: Most buyers are looking for an open plan layout where there is an easy flow between the main living areas. If this can be achieved easily (e.g. by removing a few non-structural walls), it could add significant value.
• Maximising natural light: The more natural light a space gets, the brighter, airer, and larger it will feel. If your budget will not cover new windows, new window dressings could help maximise both light and privacy.
• Updating the kitchen and bathrooms: To put it simply, kitchens and bathrooms sell homes, so these spaces are obvious targets when renovating for profit. To help keep costs down, focus on cosmetic changes (retiling, upgrading tapware, etc.) and avoid moving services (electrical, plumbing, etc.).
• Improving the street appeal: First impressions matter and how a property looks to passers-by can have a major impact on its value. As such, simple things like tidying the front garden and repainting the front façade can pay significant dividends.

Whatever changes you choose to make, the important thing is to have a set budget – and to stick to it. As a general rule, most property experts recommend spending a maximum of 10% of the property’s value on a renovation. However, this amount should be tailored to suit your renovation plans and the increase in value you can reasonably expect.

Upgrades that are not worth the money

Just like there are updates that usually add value, there are also some that will usually be wasted cost. This includes:

• Walk-in robes and walk-in pantries: While these can be a selling feature in the right home, they take up a lot of space. This can be quite expensive to create and could compromise the flow of the rest of the property.
• Natural materials: While stone and timber are undeniably beautiful, they are also unnecessarily expensive unless you are renovating a high-end home. Instead, consider a quality wood look laminate for your cabinetry and composite stone for your benchtops and splashback.
• Custom features: Whether it is specially designed cabinetry, a bespoke light fixture, or handcrafted tiles, custom features are usually not worth it. They may also narrow the appeal of the property, which can impact its resale value.

Want more information?

If you are considering buying an investment property for the purpose of “house flipping”, Search Party Property can help. As property specialists, we understand how to renovate for profit and can guide you through the whole process. We can also work with you to plan changes that will add real value and deliver maximum return on investment. 

For more advice on property investing, contact us for a discussion.