The beauty of renovating is you’re physically making changes to a place and doing what I call creating your own luck which means specific tasks to increase the value of that property beyond the cost of the renovation and the original purchase price of the property. Therefore, minimising risk if the market were to take a dip. Whereas, if you’re purchasing something brand new, there are no options available to you if you have to sell and the market has changed for the worst, you are going to take a hit and ‘realise’ that loss. So in my view, renovating is a very safe way of growing a property portfolio. A controllable step by step way of increasing value and being able to leap from one property to the next if that is your desire. Sometimes renovation profits might not be excessive but usually outperform an individual’s ability to save that same amount of money in after tax dollars.
For people with loan serviceability, interest rates are at an all time low and banks are very willing to lock in these low rates if you plan on keeping the property long term.
Renovating takes time and money and as our expectations around travelling to the workplace have changed significantly, there are more people with more time on their hands who will consider this a great opportunity to get started. This might explain the increase in interest around the topic of renovation online, in the educational space, at the shops and on TV. If nothing else, now is a great time to plan.
For people with healthy loan serviceability, interest rates are at an all-time low and banks are very willing to lock in these low rates if you plan on keeping the property long term.
However, under difficult market conditions, the banks will tighten their belts and traditional lending will get tougher as the banks consider their risk above all else. Some renovators use this as an excuse to stop but there are so many other ways of obtaining funds outside the bank and connecting with people to partner up to keep the momentum going! And the best part with a renovation, particularly with a cosmetic renovation, is that you can move through the process very quickly in a few short months, not years! So you’re playing ball in the same conditions. Again keeping your risk to a minimum.
So the right time to renovate is when you can access funds and you’ve located a good property to work on. No matter what the market is doing!