Summer is a great time of year to do a few jobs around the house. It’s also a good time to start planning ways to build some equity in your home with a simple renovation. Here are some strategies that can quickly build equity with a small renovation or even just a touch-up.

Landscaping
The first thing a new buyer looks at when they enter a property is the exterior and the gardens. Tidying up the garden and outdoor areas and making them into beautiful places that a family could enjoy is a great way to build appeal.
 
Convert the Laundry
These days, there’s less need for an entire room to be dedicated to a laundry. So, the space is perfectly set up to be converted into another bathroom or even an ensuite. Adding an additional bathroom can really increase the appeal of a property and give it a modern touch.
 
Remove Internal Walls
If there is the opportunity to remove an internal wall to open up the living area, this can really make a big difference. This is the type of renovation that might only cost a few thousand dollars, depending on the nature of the wall that is being removed, but could have a big impact on its value, as it can modernise an older style property. Remember that every property is a little different and it’s not always possible to do this.
 
Clean the Roof 
A very quick and easy way to make the exterior of your home more appealing is to wash the roof with a high-pressure cleaner. This method can turn an older roof into one that looks fresh and modern. Cleaning the roof is an especially good option if you’re looking to sell the property.
 
Kitchen/Bathroom
These are the classic two updates that have a huge impact on the state of a property. Potential renters will likely pay a premium for a new bathroom and kitchen, while the property will also be a lot easier to sell if both are modernised. Even the simplest kitchen renovation takes time and planning. You will need to make sure you have the budget in place to get the result you want.
 
Painting & Window Coverings
When it comes to value for money, you can’t go past a fresh coat of paint and new window coverings. While it will likely cost you a few thousand dollars to have a property painted by a professional, this is one job that you can take on yourself. New window coverings are also a great way to make your home look a lot more modern. If you’re looking to sell, you should consider investing in both.
 
 
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​When you purchase a property with finance, the lender will typically order a bank valuation to help them ascertain the loan to value ratio (LVR) of your home loan. For new home buyers, this might be something that you’ve never thought about before, but the outcome of the bank valuation could have big implications for your home loan.
 
How does a bank valuation work? 
When you purchase a property that is subject to finance, the bank will order a valuation of the property through an independent valuer. The independent valuer will use a certain method to estimate the true value of the property.
 
A valuer could use a desktop valuation, where they estimate the property’s value based on comparable sales and never visit the actual property. Alternatively, they would do what is known as a kerbside valuation, where they will attend the property and look at it from the exterior to do their valuation.
 
The most common form of valuation is the full valuation, which involves the valuer attending the property and looking through it. They then formulate their valuation based on comparable sales of the other properties.
 
When the bank has the independent valuation, they use this figure to calculate the borrower’s LVR.
 
How does the bank valuation impact borrowing? 
When applying for a loan with a lender, a bank will normally want to see the borrower has a 20% deposit. This gives them a level of security in the event of a property price fall, or if the borrower defaults on their loan.
 
Borrowers can obtain higher LVR loans, however, they normally come with Lenders Mortgage Insurance (LMI). There are also other programs in place such as the FHLDS or specialist loans (like guarantor loans) that can help first homebuyers who need to take out higher LVR loans.
 
If a bank valuation comes in lower than the price you paid for a property, then you could find yourself in a situation where you have to make up the difference to ensure you are keeping within the LVR required by the lender. That could mean needing a higher deposit or looking at other options such as paying Lenders Mortgage Insurance (LMI). Both of which could cost tens of thousands of dollars.

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​Commercial real estate is attractive to investors for several reasons, and it’s normally the high yields on offer in comparison to residential property that are particularly appealing.
 
However, commercial property comes with an added advantage in that the tenant generally pays many of the outgoing costs. This can be a significant amount of money and can make an investment in commercial property even more attractive for those investors in search of cash flow.
 
Understanding net vs gross yield
 
Gross yield is the rental income you receive before taking into account the expenses. Net yield is your income after expenses.
 
When you purchase a residential property and rent it out as an investment, as the owner, you’re obligated to pay many of the ongoing costs of the property. This can have a significant impact on your rental yield. These costs include things such as the council rates, strata fees, maintenance and repairs, gardening, insurance, property management fees and water costs.
 
While you have an attractive gross yield of 5%, when you factor in the expenses that you’re paying, your net yield might be only half that. When we look at commercial property and the fact that the tenant is paying many of the outgoing costs, your net yield might be very close to your 5% gross yield. It’s important to note that every commercial tenancy agreement is a little different, and what the tenant is required to pay will be different in most circumstances.
 
The other advantage of commercial property from a yield perspective is that it is normally far greater than its residential counterpart. It’s not uncommon for commercial yields to be well above 7% or even 10% at times, and with the tenant paying outgoings, this is very appealing. For an investor in search of cash flow, it can be an attractive proposition.
 
When looking at the high net yields on offer in commercial property, it is also important to factor in periods of vacancy. Generally, when you have a residential property, it’s quick and easy to find a new tenant to take over.
 
Commercial properties can be harder to find tenants for, as it is businesses that take up the space. With commercial properties, the lease agreements are normally for a lot longer; there are many cases where businesses stay in the same building for decades.
 
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​One of the biggest mistakes new property buyers make is not understanding how much a property is actually worth. This is common with inexperienced buyers who have trouble purchasing a property at auction.
 
The auction process is not always easy to navigate, which is why it’s important to find out how you can quickly and easily get a better understanding of what a property’s true value actually is.
 
Ask An Agent
Sales agents are at the coalface of the property market. They are normally very approachable people who are prepared to take the time to discuss property in their local area. If you’re interested in purchasing a certain property, it’s possible to contact a number of local agents and get their opinion on what it might be worth.
 
Agents know what types of property are currently in high demand, as well as what has recently sold and for how much. They can be a very valuable tool in getting a clear understanding of what your property (or one you want to purchase) might be worth.
 
Online Tools
These days there are a host of free online tools that can value a property. It’s simply a matter of entering the address and the algorithm will give you a quick idea of what a property is likely to be worth based on recent sales history. While this is not a perfect valuation, it should give you some idea of what a property is worth because it does factor in what has been selling in the local area.
 
Hire A Valuer
If you want a very accurate idea of a property’s true value, you can hire a professional valuer. Many buyers choose to do this as a lender will require a valuation before approving a home loan. While a lender may not accept your independent valuation, it will give you an accurate idea of what a property is worth and if you can afford it.
 
Comparable Sales
The vast majority of valuers in Australia price a property based on comparable sales. Comparable sales are simply sales of similar properties that have occurred in the past few months.
 
The good thing these days is that much of the sales data is available for free online, and you can use those figures independently to come up with a rough valuation. The most effective way to do this is to go to a listing portal that provides recent sales data and find all the properties in the same suburb that have occurred in the past three to six months.
 
From there, you can narrow that list down to properties that match yours in terms of the dwelling type, age, condition, and land component. At this point you can see the sales of properties very similar to your own. This will give you a good idea of what the property might be worth.
 
If there is a property that has sold that is very similar to your property of interest, you can take this one step further and contact the sales agent to get an idea of how the property sold. Ask them how many people viewed the property and how many offers were made. If the property sold at auction, see if you can get any insight into the number of bidders and how it went.
 
The more information you have the better, as this will help you make the most informed decision about your own property, or one that you’re looking at buying.

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