The comments below were published on Talking Property with Domain.com.au in response to a blog posting “4 Things To Know About Adding Value To Property” by Alex Brooks.
The title of your article is quite accurate. The key to renovation is “adding value to property”.
There are renovations where people do in fact add value. And then there are ‘flips’ where people try to spend as little money to generate the maximum profit by buying, renovating and selling quickly.
As Buyers’ Agents, we regularly encounter poor renovation jobs (‘flips’) done by amateurs (‘flippers’). For example, people who purchase properties on Sydney’s North Shore for $1 million, spend $100,000 then expect to sell the property for $2 million.
Read more about ‘flips’ at https://ohpropertygroup.com/blog/beauty-is-only-skin-deep
In most cases, the renovations are cheap and nasty – and do not add value. Potential buyers who walk through end up thinking that they are being asked to pay a premium for a property which they would then need to re-renovate after buying.
This is precisely why run-down properties are often sought after as much as renovated ones. Because at least when you buy a ‘renovator’s delight’, you are able to work with a blank canvas and renovate to your taste and quality – instead of having to redo something that someone else has just done.
Bottom line, a renovation is only worth doing if you will add value to the property or if you will derive personal enjoyment from it. Poorly executed ‘flips’ just waste everyone’s time.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.