Have you considered the financial cost?
Whether you purchased the building at a cut rate that made you save thousands of dollars or you simply see it as an entry into your dream neighbour, if you have not calculated the costs it will leave a dent in your pockets. Spending more than 5% of the purchase price on renovations is a red flag that shouldn’t be ignored.
Not only will it take a lot of money, but it will also be a time-consuming project. According to Home Improvements, renovating the just your kitchen to become something that is kind to the eye and liveable can cost anything from $10,000 to $45,000 excluding the costs of labourers. They also found that the average time to complete a renovation project took 2 to 9 weeks.
Their data also revealed that if you are planning to have a perfect chill spot in the garden area it will cost you anything from $2,000 to $10,000. There will be some work that you will be able to do on your own, but its always best to call in the professionals to get the best value for your money without adding to your costs.
Don’t let the tax advantages drive your reasons to invest
Investing in property can be a risk-taking opportunity that can see you make some good returns, or throw you further into the debt pit. Not all renovator’s delights are a bad investment, but if you get taken by the tax advantage point you could be in for a shocking turn of events.
There are some poorly performing properties that get sold because of the tax advantage. Whether your decision to invest in the property is due to the financial assistance you can get through depreciation allowances and stamp duty savings, you will have to consider the ability for the property to get you any capital growth.
You will have to research the property thoroughly in terms of how long it has been in the market. Consider factors such as how much similar properties are selling in the area. If you are seeing a lot of for sale signs in the region you should know that something is up. If it is offering a high rental yield, then this should be taken as a warning sign.
Will you be able to sell it in future?
An investment property is all about getting returns on what you put in, and if the cost to renovate the property outweighs the returns then leave it alone. It would be devastating to take the time to choose a home loan that offers you the best features for a house that will see little to no return on the work you put in.
As the adage goes failing to plan is planning for failure. You will have to pay your dues and thoroughly research the house and whether it is worth buying. Get a professional eye who will look at your rough diamond with an indiscriminate eye to help you know if you are making the right decision.