Gaining wealth through property flipping can be very appealing but while the buy – renovate – sell game sounds simple, there’s a strategy involved in transforming a dwelling into a spectacular one for a profit.
First, ask yourself – why do you want to renovate? What do you want to do with the capital growth?
What if you buy, flip, rent out, finance, and repeat to retain all the benefits of the renovation instead of flipping and selling? This could offer more benefits – one, the newly refurbished property will be attractive to more potential tenants who are willing to pay a premium for better housing and two, rental returns will be higher now that the property can outshine its competitors. Remember, you won’t have to pay CGT, if you keep for 10 years or more! This strategy can create capital growth, build your asset base, and increase your wealth.
Before renovating, make sure you do your homework and plan. Get approval if the property is in a unit complex as there are certain rules that govern what you can and cannot do. Failing to apply for the correct permission may get you penalised and some can even force you to undo any renovations without approval – not the ideal scenario.
Research current design trends and look for renovation tips that appeal to modern tenants and stand the test of time. What’s the style of the neighbourhood and its demographic? Where is the best place to invest that will improve the property and get the best bang for your buck?
Don’t forget to work on a budget for renovations as well. Consider the material, labour, and miscellaneous costs. Avoid spending over 10 per cent of the property value on renos and work out your financial, time and stress limitations. Are you planning to DIY? Remember that there are aspects of the job that will require experts. Shop around and ask for at least three quotes.
One of the most important parts of renovations is paint jobs! It can quickly refresh the look of the property with updated trims. Spruce up the driveway, fix up the fence or refresh the lawn if needed. Install new outdoor lighting and update new house numbers or letterboxes. A fresh lick of paint on the exterior is just as important as the interior! Choose light and earthy colours that allow tenants to add their personal touch.
How about your flooring? Changing your floors is an affordable way to update a property’s aesthetic. Pull up carpets and install laminate floorboards for a cleaner look.
The kitchen and bathroom are the most expensive areas to renovate. To stay within budget, you can just update the walls to something bright and airy or simply change the cupboard handles. Replacing small fixtures and fittings is sometimes enough to produce a wow factor. You can even just tile over the top of the existing tile floor to do away with the hassle and cost of taking the old floor down or just replace curtains with modern lights for a brighter look.
Once your renovation is done, you’ll be able to refinance the property, gain equity, and repeat the process! You can do this instead of flipping and paying tax for a quick buck.
Got any questions? Give us a buzz and fire away! Property accounting is our bread and butter – so get in touch to tell us about your business.
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975
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