Buying, renovating and selling a home quickly can be a fast-track to property investment success. On the flip-side however, mismanagement of your investment or buying without knowing the lay of the land, can quickly change your dream into a nightmare. To help make sure your real estate doesn’t cause you night terrors, we’ve whipped up a quick guide to the basics of ensuring quick capital gains.
Don’t over-do the renovations
Throughout Australia the number of home renovations has trended sharply upwards in the in recent years, according to a Housing Industry Association (HIA) report. These increases may be helped along by continually increasing property prices, which encourage people to access their increasing equity to renovate.
Fantastic as this is, if you’re buying and selling quickly for profit, hiring professionals to renovate may blow your budget and cause the amount of your investment loan to skyrocket. A more affordable option may be to undertake DIY renovations before sale – a practice which the HIA indicates has also been on the rise.
When doing so, it’s important to focus on cosmetic renovations such as painting or repairing visible damage rather than expensive structural altercations. These small improvements could be the key to unlocking your home’s full resale potential without breaking the bank.
Research the area, then research some more
It is absolutely essential that you thoroughly research the area and market that you’re buying in. Don’t assume that growth in the past equals further increases. Instead of looking at trends in the area to predict the future of the market.
For example, buying an apartment in Sydney may have once been the ultimate investment purchase, but the recent construction boom has increased its supply. A larger apartment supply may eventually lead to a slowing of the markets value growth rate, or even a decrease in price – not the ideal situation for investors.
For this reason, looking outside of central suburbs may be a more prudent investment, netting you a better return at a lower purchase price. One such suburb is Knoxfield, a small area less than an hours driving east of Melbourne’s city central. This area has an affordable median house price of just over $550,000, and experienced capital gains of almost 25 per cent last year, according to a report by the National Australia Bank, compiled using CoreLogic RP data.
Grab a cheapy
CoreLogic also recently found that over 53 per cent of investment-owned properties are valued at under $500,000. The reason behind this statistic may be that buying and selling at a lower price will make the property accessible to a larger portion of Australian’s, than say a $3 million dollar cliff-top mansion would be.
By opening the sale of your property up to a larger number of potential buyers, you may increase its demand. This could mean more interested buyers, more competition on auction day and a higher sale price. These are all factors that should make it easier to sell your property for more than you purchased it – ensuring your mortgage repayments aren’t for nothing.
As you can see there’s endless criteria to consider when purchasing an investment property, so securing your finances may fall by the wayside. We have extensive experience helping investors in exactly this situation. So why not use our vast experience and knowledge to help secure the most suitable loan product for you – without the hassle.