It comes as no surprise that several investors have decided to hold back as they wait to see what happens with property prices, lending policies and interest rates over the next few months.
On the contrary, instead of just sitting around to see what happens with the real estate market, you could be taking advantage of a huge opportunity. Make the market work for you during this time by improving the property you already own. With the increased buying and selling costs, investors and homeowners alike are adding value to their properties. In addition, for several the property is not just an asset, but also an opportunity to retire comfortably.
A Little Renovation Equals A Lot Of Profit
Let us assume for now that you are fifty-five years old and have a Sydney home with a value of $600,000. If you do $50,000 worth of renovation, you will effectively add another $50,000 in value, which will make the value of your property following renovation $700,000. You do not have to dip into your life’s savings in order to renovate your property because you can use the equity that exists in your home.
If the area where your property is located is anticipating a growth rate of about 7% over the next decade, the value of your property should double over the next ten years, which would bring the overall value of your renovated property to $1.4 million. Without renovation, the same property would only be valued at $1.2 million.
In a nutshell, by doing $50,000 worth of renovation, you can effectively increase the value of your property by $200,000. If you chose to sell your property in ten years, you will be able to use the extra profit for your retirement. Renovating your property is an opportunity for increasing the equity of your properties.
Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 – 2008
Hi Sean,
This is great advice. I think this is a much better use of the equity that you’ve built up in your home than using it to take a holiday or spend it in some other way that you won’t be able to capitalise on it.
Renovating is obviously a great way to increase the value of your property.
Property in Australian capital cities has a habit of doubling every 6-10 years which is great for getting a tax free income. My opinion only…If I was fifty five years old I would be using the 50k for holidays and taking out life insurance to help my kids later.