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As major property markets approach the bottom of the cycle, an increase in the supply of old homes will present unique opportunities for profitable renovation. How can investors maximise their wealth creation options in today’s market?
Renovation expert Naomi Findlay said that renovating for profit could be the right strategy for any investor with the right property, a working knowledge of property investment and an effective end-to-end strategy.
In fact, despite the recent downturn in major markets across Australia, renovation remains as one of the best tools to improve the value of a real estate asset.
“People aren’t going to be able to ride the magical wave that they’ve been riding and surfing for the past five or six years in some of the markets. But no matter what market you’re in, if you find the right property and you know what you’re doing…then I believe that there is always a good time to renovate,” Ms Findlay highlighted.
In today’s market, investors could benefit specifically from the influx of “80s ugly houses” from the housing boom in the 1980s, particularly those which “don’t have a lot of scar tissue”.
The renovation expert said: “These 30- to 40-year-old homes, from a structural perspective and from a level of renovation perspective, are a really great opportunity for those sitting inside their first 10 property renovations,” she said.
“They generally provide slightly lesser challenges – it’s more about maintenance upgrades and adding value than rebuilding.”
For investors who will look to renovate for profit today and in the near future, Ms Findlay strongly recommended getting professional training or professional help.
Where home owners could easily make money out of “throwing things together” and calling it a renovation 10 years ago, investors nowadays are faced with more sophisticated prospective buyers and tenants who are looking for high-quality products.
According to Ms Findlay: “10 years ago, we could have Rambo renovators that would get lucky three, four, five times because they were able to paint, they were able to floor, they were handy. They were able to throw things together and just bodge it up, and they were able to make money.”
“The biggest thing that’s changed now is if you want to create wealth by renovating, you would need a professional or be a professional yourself. It’s a serious side hustle. You need to understand the markets better – know what the market wants and deliver it to them at the lowest possible price point. Naturally, it really needs to be quality work.”
Buyers and tenants have grown to become more discerning, thus making more sophisticated and intelligent markets across Australia.
“They know what they want and they know what can be achieved,” Ms Findlay highlighted.
At the end of the day, the renovation expert advised investors to be smart about assimilating renovation into their overall investment strategy because, while renovating for profit stands as one of the most common add-value strategies, it’s not a project fit for all wealth creation journeys.
Take the time to reassess the whole portfolio and speak to property professionals, where appropriate, in order to make the most out of the opportunities in the current market, she concluded.
Tune in to Naomi Findlay’s episode on The Smart Property Investment Show to know more about the renovation tips and tricks that will lead to property investment success.