1 Yr Old - How Add Value ???

hi everyone,


we have purchased a 1 yr old ex-display home ( currently as a PPOR). Other than paying as much as we can to the loan, we would like to know what can we do to add value to the property so we can have it revalued and draw down on the equity to purchase an IP. I've read that older properties do better when renovated or rejuvenated for value adding purposes. But what about newer properties ? Any way to value add at all ? There are a few things that we are thinking of doing but would like to know which ones would add value to the property more and which ones will not. Here are they :

* there's no window coverings at all. (should we go for blinds, curtains, should we put pelmets ?)
* there's very basic lighting. (should we add downlights/dimmer switch?)
*the back and frontyard are covered with tan bark and stones with few low maintenance plants. (should we add grass or pave some area, should we add pergola?)
*roller garage door (should we put remote control?)
*off white-ish wall color through out (should we put feature walls in the living areas and bedrooms?)
* there's central heating but no airconditioning (what and where should we install? or leave as is?)

Before the settlement, the bank has valued this property about $20K more than the purchase prise. We have also paid some deposit. We are aiming at buying an IP at the end of the year, but not quite sure how the draw down on equity works. Have read some info about it but still a bit vague to us.

DO we get an independent valuation officer and then bring the valuation to the bank ? Or do we ask the bank (where we have the mortgage) to revalue the property?

I would appreciate all replies and links to broaden my knowledge. I have just started reading Peter Spann's book, hoping to find good tips from there.


thanks.
zee
 
Is your goal to increase the sale value if you sold it or to get another $30~50per week in rent? Zee, as I understand it your actual goal is to raise finance to purchase an IP. I am no valuer but window coverings, bark chips etc, remote garage doors may give a better impression, but will this give you a meaningful jump to the banks valuation? Since the bank already has valued your property at $20K over your purchase price...that's really good already, I have doubts.

If you goal is to purchase an IP I would first simply talk with a good mortgage broker and review the best way forward to finance an IP, with what you have right now! They may say "Zee, until you get some more equity you are dead in the water" if so then continue to pay down debt and start work on ways to increase your PPOR equity, however maybe a couple of $1000 in mortgage insurance could get you moving right now.
 
Most banks are currently conservative on valuations due to the current property market conditions.

Adding value to a new property may not realise any gains due to this.

In an older suburb though it may be a different story altogether as well renovated homes are in high demand and valuers are able to find significant equity gain when judging against other renovated homes.
 
I have heard from some brokers that in most cases the bank valuer does not even visit your home to revalue.

They simply look at number of bedrooms, bathrooms, land size , etc... as well as recent sales in the street, area.

So, I would challenge if adding window coverings, lights, roller garage door, etc... would actually immediately increase the value.

Thoughts ?
 
Zee it can be dodgy when you renovate into a falling market, the house becomes easier to sell when you pretty it up thats all. doesnt mean you will get more money when you sell it, unless it's a renovator to start with,
Your house soumds just fine for a renter though,
Just my 2cents worth..........
 
hi again everyone,


the goal was to raise finance to purchase an IP. from what i've read, you renovate the property , have it revalued and then access the new equity for deposit on an IP. But of course I need to factor in the current market condition, and the fact that our property is new so there's not much to add value on i suppose. So in this case, what else can we do then?

Learningman, what does "dead in the water mean'? Also, we are not happy with the mortgage broker who helped us with our previous loan. could you recommend a good one in Melbourne. ?

We are not in a hurry to purchase an IP, but im asking these questions now, so we can be ready when the opportunity comes. We still have a lot to learn about finance.

thanks,
zee
 
zee said:
Learningman, what does "dead in the water mean'?

It means one's basically stuck, i.e. in a situation where one can't move forward due to current circumstances...

Just picture a corpse floating in a swimming pool ... it doesn't do anything but float, and it won't do much until somebody else, (that is, an external influence), moves the body... :)

Hope that helps. :rolleyes:
 
zee said:
hi again everyone,


the goal was to raise finance to purchase an IP. from what i've read, you renovate the property , have it revalued and then access the new equity for deposit on an IP. But of course I need to factor in the current market condition, and the fact that our property is new so there's not much to add value on i suppose. So in this case, what else can we do then?

Learningman, what does "dead in the water mean'? Also, we are not happy with the mortgage broker who helped us with our previous loan. could you recommend a good one in Melbourne. ?

We are not in a hurry to purchase an IP, but im asking these questions now, so we can be ready when the opportunity comes. We still have a lot to learn about finance.

thanks,
zee

I have used Rolf Latham and I was very happy with the outcome.

All I mean is talk with a broker like Rolf, they seem to know there stuff well, and if there is a reasonable viable/legal way for you to get finance they can help you. This would In My Humble Opinion (IMHO) be the best the first step.

Take action.

dead in the water


Unable to function or move; inoperable. For example, Without an effective leader, our plans for expansion are dead in the water. Originally referring to a crippled ship, this colloquialism was soon applied more broadly.
 
As a valuer (or former one in Melbourne for the last 9 months) I would guess that in the current market you would be lucky to get the cost of the itmes/improvements you have mentioned back in value.

Remember cost does not equal value (first thing you learn in valuation 1 at uni).

Remember that land appreciates and buildings depreciate (unless building costs increase). Most of the increas in market value over the past few years has been represented in increased land values.

Being a display home it would indicate that you are in a relatively new (less than 3 years) subdivision. Unless the blocks of land in the area are increasing it is unlikely that you will get a much higher valuation.

Many cosmetic upgrades that people do, add to saleability rather than value. Think of it this way - objectively- and this is how the valuer looks at it...you are a potential purchaser. You are looking a two identical homes, one is presented as yours is and one is presented with the additions you have described. As a purchaser do you go around, look at all the added features and calculate your offer/purchase price accordingly??? Do you say house A has a remote garage door which would cost me $800 to install, therefore I will offer $800 more for house A over house B??? If so then that is how you base your offer on a cost replacement basis...unfortunately most of the market and valuers do not work this way.

just some thoughts,

cheers,
RightValue
 
Well said Right value,

There are also certain banks that are known to exclude certain fixtures and fittings from a house when it comes to valuing a property.

Most banks will look at the size of the property and the number of rooms and do a direct comparison to similar properties that have sold in the area.

Heres the rub, if your property ends up superior to other similar properties. They may still take the highest resale amount and apply it to your property. However if your property cost $50k more then thats your loss.
 
Hi,
I thought that 'dead in the water' was a nautical term - sailing ships etc. No wind and you are becalmed and cannot make progress.
Terry

(whoops, just reread Always Learning's post!)
 
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