I wanted to share my story with you of how I was recently able to make $55,000 profit on an investment property of mine.
At the ripe old age of 23 I bought my very first investment property. I was still living at home and in the very early stages of my working life. I was able to save $10,000, which at the time was enough for a deposit for a small unit in Fairy Meadow, on the south coast of New South Wales. I got it for just $104,000, the year was 2002.
For the next 14 years I really didn’t have to do much with it. For many years an older gentleman lived happily in the unit and there was not much work or upkeep that I was required to do. I pretty much just forgot about it, while as the years ticked by the value of the property continued to rise.
In 2016 the tenants at the time were moving on, so I decided to use this opportunity to go in and give the place a bit of a face-lift.
To fund the renovation I was able to use equity that I had in the property. The cost all up, including renovations and the money lost having no tenants for the 3 month period it took to complete was $25,000.
Before I started, the property was valued at $280,000 and was rented for $270 a week.
With the help of some family and friends I went in and gutted the place. The kitchen and bathroom were completely pulled out, as was the 1970’s green plush carpet in the bedrooms. After I cleared the space I sent in the tradies to do their part.
First in were electricians to re-configure some of the power supplies and to install some modern down-lights. I then went about buying a new kitchen including an oven and stove top and had them all installed. With the bathroom I decided to re-configure the layout to make it a more practical space. It got completely re-tiled and I bought all new toilet, shower and vanity.
After this it was time for finishings. I was able to utilise the existing wooden floors, which I had polished and they turned out great. The entire interior was re-painted and I also replaced the old vertical blinds and installed new pull down blinds on all of the windows. In the bedrooms I added wardrobes for better storage and convenience.
Upon completion, the new valuation of the property came in at $360,000. That’s an increase of $80,000. I was quickly able to get new tenants in and the rent increased by $80 per week to $350.
The figures
Valuation pre-renovation – $280,000 Valuation post-renovation – $360,000
Increase of $80,000
Rent pre-renovation – $270 per week Rent post-renovation – $350 per week
Increase of $80 per week
Cost of renovation including holdings was $25,000 (taken from equity).
Profit $55,000
This was just a small renovation project that brought some great results. In a short amount of time I was able to increase the value of my property portfolio.
If you would like to undertake a similar project either with an investment property or even your family home, get in touch. You may be able to use equity you have in a current property to fund it, as I was.