Investors ask: Cosmetic renovation returns
Q. I want to increase the available equity in my investment property portfolio through undertaking some cosmetic renovations – but what are the ‘rules of thumb’ around this? How much return should I be getting for my spend?
A. One of the easiest ways to increase your equity in a property is, obviously, to undertake a cosmetic renovation.
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Now, one of the rules of thumb that most people implement is: for every dollar that you spend on renovation, you need to be making at least $3 back in equity.
Often that does not work out, because people miss out on important steps beforehand. If you're focusing totally on properties with renovation potential, the first step is to actually buy it at the right price.
So it all starts with buying that property at the right price so that you can actually manufacture the equity.
Victor Kumar, director, Right Property Group
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