Join our investing community

Renovation

Discussion in 'Investing Glossary' started by Glossary, 28th Sep, 2006.

  1. Glossary

    Glossary Active Member

    Joined:
    12th Sep, 2006
    Posts:
    25
    Definition:

    The process of improving a rental property or your own home. Renovations can be as minor as a new coat of paint or changing the tap handles to adding bedrooms, bathrooms and completely reconfiguring the structure.

    Successful renovations will add amenity to the property and should thus increase its rental yield and ultimately its value. From a purely financial perspective, the renovation will only be successful if the total return (i.e. increased rental and value) exceeds the amount spent on the renovation (including factoring in the value of one's own time if it is a DIY job).

    One trap to beware of when carrying out substantial renovations is that upon sale of the property you may become liable for GST.

    The capacity to renovate and thus "value-add" to an investment property is a major advantage which property investments have when compared to other asset classes. However, not all renovations will necessarily add value and strict attention should be made to both the projected end value before commencing a renovation project and your budget when carrying out the work.

    Also known as:
    • Reno

    See also: