Expert reveals trick to renovating in a rising market

Whether you’re going the DIY route or roping in contractors, it’s sometimes difficult to determine if that additional time and money is worth it in the long run.

Speaking to Smart Property Investment’s Phil Tarrant on a recent episode of The Smart Property Investment Show, renovation expert Naomi Findlay revealed that it really depends on “how much you want to juice or squeeze out of your property”.

While she admitted that not every property is right for renovating, she would recommend it to people that “truly want to squeeze and ring every possible uplift or value-add to a property that they can, even in a lifting market”.

Confessing that she’s “absolutely not one of those that believes that every single property needs renovating”, she argued that it comes down to not just whether you can add value, but what kind of property investor you are.

If you’re happy to let the market do the heavy lifting, “then maybe renovating isn’t for [you],” she said.

She encouraged property investors considering renovations to think about what their target return on investment looks like before they begin the process.

According to her, “renovating isn’t unicorns and rainbows”.

“Sometimes it’s really hard work, sometimes it’s stressful, and it’s definitely time.”

“There is an opportunity cost for people that are putting time into the renovation of their property,” she added.

Moreover, Ms Findlay warned investors not to overestimate the impact their efforts will have on the final market price.

“Not every level of renovation is going to get you the same return on your dollar in,” she said.

According to Ms Findlay’s plentiful experiences, the kinds of renovations that added the most value were those that added additional functionality.

“You really need to be looking at smart and clever ways to update elements of those spaces if you’re looking to do it on a budget.”

Dismissing the general rule of thumb that says spend no more than 10 per cent of the total value of the property on renovations, Ms Findlay explained that given varying property values, a blanket sum is unreliable. 

Instead, she recommended property investors approach things with the market in mind and do their research.

“I love to work on a system where I look at three different plans of attack with a property. So, what I think the market wants, so it has to be driven by market research, what I’m noticing they’re paying for or what I’m noticing that the property will be valued against comparable to other properties,” Ms Findlay said.

“It’s really unsexy and unglamorous. I do the math of estimating exactly how much those renovations would cost and exactly the value that I think I would get for those three different levels of renovation.

“I want people to understand that renovating for wealth is not about romance, it is about data, it’s about analysis, it’s about research and it’s about knowing your market,” she said.