What is done differently with renovating for rent vs profit?

Hi all

never renovated before so I am just wondering is there any difference at all with regards to renovation for rent vs for profit? or a efficient renovation should deliver both?

THx for all replies
 
just found a suburb where 4 bedders get about $50-70k more equity than a 3 bedder.

all the 3 bedders have timber front or rear verandahs that with about $5k could easily become a 4 bedder,

just know your market.
 
Hi all

never renovated before so I am just wondering is there any difference at all with regards to renovation for rent vs for profit? or a efficient renovation should deliver both?

THx for all replies

I think the reno for rent is actually the reno for resale, but you found out that you didn't really do so well with the expected profit margin if you were to sell, so you keep it and rent it out instead. :D
 
When I do a reno for sale, I make sure everything is matching (light fittings, handles, etc - all silver or gold). I am currently doing a reno on a rental, and it will be rented again for a few years before we move into it. So I have gone for brushed silver light fittings in the renovated rooms, and have noticed the older fittings are gold....not a problem for a rental. I'm also putting in a dishwasher space in the new kitchen, but wont be putting in a dishwasher now, will do that latter when its our place.

So really, depending on how big the reno is...ie partial or total, may depend on what and how much you do...ie if its only going to be rented, or sold on.
 
I think the reno for rent is actually the reno for resale, but you found out that you didn't really do so well with the expected profit margin if you were to sell, so you keep it and rent it out instead. :D

Hey, who told you that?! I was always going to hold it... wasn't I? :p
 
Probably one unnessasary job would be an external paint providing the current job is ok. Not sure how many people would pay extra so the neighbours can look at the nice house. I would save that for when you sell. That being said i actually painted the outside of mine straight away due to the ugly colour that would put people off:eek:

I installed an additianal toilet. That was agood call for rent.
Installed a door turning a 3 bedder into a 4. Good call also

Currently considering cutting my 8.5 by 5.5 loungroom in two turning my 2 bedder into a 3. Small cost but should also up rent significantly even though floor area has not changed.

Just my thoughts
 
Currently considering cutting my 8.5 by 5.5 loungroom in two turning my 2 bedder into a 3. Small cost but should also up rent significantly even though floor area has not changed.
This is interesting. I'm rejecting property after property because the living space is just too small.

Wish agents would put floor plans with dimensions on their listings. Sigh.
 
This is interesting. I'm rejecting property after property because the living space is just too small.

Wish agents would put floor plans with dimensions on their listings. Sigh.

Should add that after i put a wall up the living area will still be 5.5 by 5.5. not too bad. This will be the only living area but. The agent said this would be fine as its a central CBD location and its this location people want more than huge floor space.
 
Hi all

never renovated before so I am just wondering is there any difference at all with regards to renovation for rent vs for profit? or a efficient renovation should deliver both?

THx for all replies

I think there are several differences, first because reselling requires more costs so more profit margin is required, due to CGT and agents fees etc. Also right now at the top of the market would not be a good time to be reselling.

In order to get higher margin for resell you need to spend more on the reno and reno to the highest spec that buyers will pay a premium for. So it has to make sense to the particular building, no over capitalising. For example if you install a nice second hand kitchen in a rental your rent will increase as much as a new kitchen, and the increased rent will influence the revaluation. But only a new kitchen will get you top resale.

Also, I'm not sudgesting you should ever do a poor job, but your ip reno needs to be a hardy one, because some tenants can be hard wearing, and you are responsible for repairs/maintenance.

One tactic with resell is to hold for 12 months for a CGT saving, what you can do here is give it a tidy up at first, then rent 12 months, then renovate for resale. That way your tenants wont nasty up your schmick resell reno :)
 
Also, I'm not sudgesting you should ever do a poor job, but your ip reno needs to be a hardy one, because some tenants can be hard wearing, and you are responsible for repairs/maintenance.

Couldn't agree more. But depreciation levels also come into play if your strategy is negative gearing. Quality fittings and fixtures can be depreciated at higher rates.
 
In terms of the works undertaken, if it is worth over 12k and you flip, you need HOW for the works to be guaranteed for 6 years I think. So if something
goes wrong, you will need to rectify the works. Alternatively if you have engaged a registered builder and have entered a contract that is their responsibility.
You wouldn't take out HOW if you renovated and kept the property.
 
In terms of the works undertaken, if it is worth over 12k and you flip, you need HOW for the works to be guaranteed for 6 years I think. So if something
goes wrong, you will need to rectify the works. Alternatively if you have engaged a registered builder and have entered a contract that is their responsibility.
You wouldn't take out HOW if you renovated and kept the property.

I think you'll find thats only for work under a building permit. Best to get a builder to do these because the process of operating as an owner builder has hair on it :D

Better still avoid permits altogether by knowing, and working within the regs
 
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