just fix up or do a full reno?

[TMNT]

hello peeps, what would you do in this situation,

have bought a house, needed gutters redone, a few major issues that were crucial but fairly labour intensive

I can spend $10k to do it up and then it basically falls into line with the surround original homes in average condition, rent will be approx $250 per week,

this area is a bit rough and hard to rent, a fully renoed one only fetches $260 per week,

that being said, I can repalce light fixtures, polish fbs, new kitchen for an extra $5-$6k, for a mere $10pw/$500pa increase, which is pretty poor value

however this may increase the value of the house by $15k odd, and then I can withdraw the equity out and go to my next project

what would you guys do? I dont intend to sell, but one side of me thinks, kill 2 birds with 1 stone and do it now, instead of again ina a few years down the track, by doing the reno, I can get extra equity out, but the ROI for rent increase is low

 

[Jamie M]

I'd be inclined to go the second option if you can get it done at the price.

I'd also expect a bit more than $10 p.w for those sort of improvements.

Where's the IP located?

I've carried out similar renos on a couple of properties that boosted the rent on each by $70 p.w (first was a unit in Queanbeyan, NSW and the second was a house in southern Canberra).

Cheers

Jamie

 

[TMNT]

I'd be inclined to go the second option if you can get it done at the price.

I'd also expect a bit more than $10 p.w for those sort of improvements.

Where's the IP located?

I've carried out similar renos on a couple of properties that boosted the rent on each by $70 p.w (first was a unit in Queanbeyan, NSW and the second was a house in southern Canberra).

Cheers

Jamie

youd be surprised,

a few suburbs that are in the mix are Portland vic, Ashmont NSW, Maitland,

 

[oc1]

youd be surprised,

a few suburbs that are in the mix are Portland vic, Ashmont NSW, Maitland,

Why Portland? It has been such a poor performer.

Oscar

 

[ket]

fix-up or reno?

Not knowing the full details I believe that the idea is that unless there are "significant" equity gains in a full reno now then you would leave that until you intend selling or when it becomes necessary.
If you really want to get into it you need to do some detailed numbers and work out what will give you the best return and how long it will take to recoup the costs, etc, etc, etc!
Lots of ifs and buts, but that's often the way with property and why we always have to return to "The Numbers"!

 

[TMNT]

agree, im thinking of not doing the full reno but just the 'bring it up to rentable condition" reno, but ill have a bit more competition in renting, b ut spending an extra $6-$10k for an extra $10 per week and some possible equity gain (the area doesnt have huge sales to justify equity increase from renos,

but its tempting to say, change a few light fxitures, here and there and tile a few rooms, just to make it look sexier!!

decisions decisions

 

[westminster]

If you do the fuller reno will it be easier to rent out?

I'm thinking along the terms of - minor reno and you are competing against the masses and it might take 4-6 weeks to rent out, do the fuller reno and it rents out first week to excellent tenants who stay longer.

Its really hard to quantify but if you think the fuller rental will reduce vacancies you need to try and factor that into the decision even if it's only a little bit more rent.

 

[westminster]

Also depending on the age of the house and the age of other improvements a fuller reno will give you more depreciable items which can help offset the cost of the reno

 

[zinc]

I thought if you do a reno on a property in a lower socio/entry level area and bring it up to a high standard:

1) you'd over capitalise for the area

2) you'd still find it hard to rent out because no one wants to live in the area.

Someone please tell me im wrong as I intend to use this strategy also..

 

[zinc]

I was told by a PM over the weekend that a property with a Dishwasher and Air Con can add $15 each per/wk to your rent return!!??

But thats over here in Perth.

 

[TMNT]

I thought if you do a reno on a property in a lower socio/entry level area and bring it up to a high standard:

1) you'd over capitalise for the area

2) you'd still find it hard to rent out because no one wants to live in the area.

Someone please tell me im wrong as I intend to use this strategy also..

Yes you are generally right

However, it might be still hard to rent but you may find a better tenant, that's what I've learnt, you present ****, it attracts flies

Over capitalise - possibly but if the equity increase is appropriate and you aren't going to price yourself out if the rental or sellers market , then it's fine
Assuming the market local market isn't going to fall over

 

[zinc]

OK, say I buy in a low income, high unemployment, blue collar area.

All similar houses are going for $250k. I pay $250k for mine and do a reno - all the basics - add fence, washing line etc. Reno kitchen and bathroom.

Say i spend $10-15k.

Is there a way to figure out 'how far above $250k will the Valuers appraisal for my property be?'.

Would it now be worth $280k, or even $300??!!

 

[lizzie]

... or still $250 as that's the limit of what people in the area are prepared to spend ...

Only research will tell

 

[Truly Exotic]

OK, say I buy in a low income, high unemployment, blue collar area.

All similar houses are going for $250k. I pay $250k for mine and do a reno - all the basics - add fence, washing line etc. Reno kitchen and bathroom.

Say i spend $10-15k.

Is there a way to figure out 'how far above $250k will the Valuers appraisal for my property be?'.

Would it now be worth $280k, or even $300??!!

it will completely depend on the area,
also depends on the quality of your renos,
also depends on what the $10-$15k is spent on,
also depends on demand/market