We often talk about maintaining the longevity of a property, serving the purpose of achieving a long-term investment strategy goal.
What defines ‘long term’ can vary from investor to investor, from property to property.
When you have determined that it is time to move a property on, which is when the efforts that you’ve put in – over however long you have held the property – will hopefully pay off.
Flipping properties is another property investment concept that has grown significantly over the past decades.
Gentrification of suburbs will often lead to an influx of property being snatched up, renovated and returned to market to sell at a profit.
Where landlords can benefit from others’ experiences in ‘flipping’ property, is in the evidence of what works, what doesn’t work and where to draw the line when it comes to renovating property. The type of cosmetic and structural changes a property may undergo to see an increase in value may differ from place to place.
This is largely due to varying markets, local infrastructure and liveability of an area. Look local to see the housing trends and what appeals to those renting and purchasing property in your area, this will help determine what you can do to your property to increase its all-round appeal.
What to consider:
- Your first thought should be considering whether a renovation will result in a return on investment. Part of this consideration should be how you may be affected by capital gains tax.
- Budget planning: Plan and stick to it to avoid overcapitalising on your property. Include provisions for hidden costs that may pop up throughout the process.
- Market research, including sustainable design options and trends. If you are renovating to keep the property an investment, what trends have longevity? If you can avoid it, you don’t want to be completing further renovation anytime soon.
- Profit potential. Consider what areas of your property are the highlights. For tenants, what do they like about the property, what changes could further its appeal? Seek professional opinions to support your goals for the property.
- Permits and approvals. For large works outside cosmetic changes, you will likely require council permits and approvals. Factor the time it takes for these to be processed into your overall timeline.
When it comes to your investment property, you want it to continue to remain a positive asset for your over the period of ownership.
All properties, at some stage, will require work and whether large or small, you’ll want to ensure that any changes you make will have a positive effect on the property and its return.
While you may not have bought your investment property to ‘flip’, you don’t want to it to flop in the market, and by exploring where others have had success, you’ll be better prepared for making the best decisions for your property.