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Renovating a property is a lot like having a child; it’s far more difficult than it looks, and nothing can prepare you adequately for it. Before we go through our seven mistakes property investors make when renovating, here is our number one tip – don’t underestimate anything when it comes to improving the property.

7 Mistakes Property Investors Make During Home Renovations

1. It’s My House!

Our homes are reflections of our personality. By painting walls, adding features and hanging up quirky artwork, we can show the world just how unique we are.

Investment properties are not our homes.

If you do things to the property that demonstrate your individualism, personal take on 80’s style, or your “trademark look,” then by definition you are alienating a good portion of the market. Far more importantly, your spending money for absolutely no reason, so leave that feature wall out. Please.

 

2. Not Researching What Adds Value

When renovating an investment property, your approach should be based on effective frugality. That is, doing something that will improve the value of the home without spending too much. Water features, swimming pools, garden features and fireplaces are all examples of potentially useless spending. Good investors will spend time researching how they can allocate their funds and add value to the property in a financially measurable way.

 

3. Undertaking Structural Renovations

Sometimes structural renovations are necessary. For example, it may have been determined that adding an additional bedroom by removing the laundry and splitting another bedroom and half will increase yield on the property. However, structural renovations are almost always more complicated and expensive than they first appear. After researching returns on investment, speak to several builders, and even then consider whether structural changes are necessary.

 

4. Being Unrealistic with Budgets

It’s easy to make an investment budget work – simply make your predicted outgoings lower than the incomings. Of course, this is just plain ridiculous but so is setting your forecasted expenses directly in line with quotes. Anyone who has done any renovations will tell you that you should always add an additional 10%, as a minimum, to your estimates. If you build in 20%, you can be more confident about generating a yield above your original predictions.

 

5. Being Too Cheap

If you have purchased a property that is in need of significant repair or renovation, it can be tempting to get everything done on the cheap. The tiles in the bathroom need replacing, so grab the cheapest quote, use the most inexpensive materials and get on with the rest of your life. But if you go on the cheap, don’t forget to start saving for the cost of getting someone in to do the job properly in a few months time.

 

6. Not Being Cheap Enough

Not being cheap enough is especially important when it comes to materials. In many areas, including carpet, tiling, and kitchen hardware, more expensive doesn’t necessarily mean more durable. “Luxury,” or “premium,” can be words used to describe something that looks beautiful, but isn’t as strong as other products. This isn’t to say you should use industrial carpet or a large metal tub in place of the kitchen sink, but prioritise durability and cost over appearance.

 

7. Overestimating Your Abilities

“I can do that!”

This is potentially the most expensive sentence any property investor ever uttered. Of course, if you are a qualified builder, plumber, electrician or painter then you are certainly able to take on a disproportionate amount of the renovation work. However, seeing a few episodes of The Block and buying a tool belt from Bunnings, is like watching Grey’s Anatomy, buying a scalpel and considering yourself a doctor.

Qualified tradespeople will do a better job, and save you time, which is vital when you are making mortgage repayments without a tenant in the property.

 

Renovations on investment properties are expensive at two levels – firstly, the actual direct cost of the investor and secondly the amount of time it takes to generate income from the investment. By focusing on what you do best – investing – and relying heavily on the expertise of others, you can fast-track the renovation, reduce your stress and optimise your investment.

To learn how you can build wealth through property, speak to one of our consultants, by clicking here.

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Dream Design Property (DDP) is a unique wealth creation mentoring program that is designed to help Australians gain financial freedom, offering each client an ongoing personalised service catering to their changing circumstances and needs. DDP has helped purchase over 1,000 properties for its clients.

For more information please visit //www.ddpproperty.com.au/contact.html

Zaki Ameer | Founder | DDP Property

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