The housing market brings with it some inherent risk, but it’s not the equity casino that some would have you believe. In fact, there’s a lot you can do to stack the deck in your favor. Whether you’ve bought a property with the intention of flipping it to make a quick profit, or are thinking of making a few changes to spruce up your beloved family home before putting it on the market you’ll find that prudently investing in the right renovations can seriously maximize your profits.
The trick is knowing where and how much to invest. Not all renovations, after all, are created equal and some are generally more profitable than others. It’s said that home improvements add an average 10% to the value of your home. Some can add intrinsic value to the property while others (minor cosmetic touches such as decoration and new carpets / flooring) are more likely to facilitate a quicker sale as they make the property more visually appealing.
Financing your project
Before you get into the logistics of planning renovations, however, it’s important to know how you’ll fund them. In a perfect world you’d be able to pay for the project through savings but for obvious reasons this is not feasible for everybody. Remortgaging your property to free up some equity from your property is often a good idea although borrowing from a reputable lender like Hard Money lenders who specialise in real estate lending can also prove beneficial. Credit cards are a viable option, too, so long as you’re able to box clever. Remember that many companies will try and lure you in with attractive 0% interest offers that may be great at first but can soon spiral out of control when the interest starts to skyrocket. Credit cards are your best recourse if you’ll be able to pay them off quickly.
The most profitable renovations
Let’s take a look at some of the most reliable sources of profit in terms of renovations. Of course the highest yields may come from the biggest investments so it’s important to plan in accordance with what you can realistically afford.
Attic Conversions- Converting your attic space into a living area is generally one of the most profitable renovations you can make. If you’re able to furnish it with an ensuite bathroom then so much the better. With an average cost of up to $50,000 it’s a significant investment, given that it could add up to 21% to the value of your home, it’s an avenue worth exploring.
Extensions- Garden space is attractive to prospective buyers but if you have more of it than you need, why not add significant value to your property by extending into it? Extensions, tend to yield a ROI of 108% so if you’re able to extend your property you can expect to extend your profits.
Kitchens and Bathrooms- Prospective buyers are very interested in these areas as they tend to spend a lot of time in them. As these areas face scrutiny from buyers, renovating them not only increases your chance of a sell but represent an average 50% return on your investment.