With any property portfolio part of the challenge is to find the twist that will help you increase your equity and improve your capital growth so that you can develop a property portfolio that out performs the averages and undergoes awesome growth.
Whether it is an existing property or an upcoming purchase the lending specialists at Awesome Lending Solutions will be able to guide you through the three most common ways to increase growth.
Probably the lowest risk and easiest of the strategies to add value to your property portfolio is to purchase a property or release from your existing property the potential for an uplift in value that can be created through a prudent property renovation
Like any of the add value strategies, the are four vital things to keep in mind.
Researchyour audience- ensure that there is a market for the end product. Nothing kills a profitable renovation like a property that is out of step with what tenants or purchasers are looking for. Think blue or bright yellow kitchens.
Budget – set yourself a clear budget. There is no point spending up big on the latest fittings and fixture if the end value of the property is less than the renovation costs. The same goes for rental properties how much can you spend before the increased rental it eaten up by the interest on the renovation.
Talk to the experts – even with a small renovation, it’s important to talk to the right people. For example, if there is electrical or plumbing work involved you may need to get some tradespeople involved. And then the is the taxation matters that you will need to consider like scrapping and depreciation schedules.
Have a clear vision or plan – It might seem like common sense but it is surprising how many time investors start with one idea in mind and then half way through a project spot the latest trend or design and change their vision. The challenge this creates can be in additional expenses and time. Remember your greatest enemy is time, every day week a property is unsold or untenanted is a day of lost revenue.
Having these four things clear planned at the being will make the process of obtaining a renovation loan much easier as the lender will be able to clearly assess the viability of your project.
Granny Flats & Duplexes
Granny Flats are a great way to take the next step up from adding value with renovation. Just like renovations your need to follow the four vital things. With the research phase though you will also need to check to ensure your site complies with the Development set out in the State Environment Planning Policy (SEPP)
With the Granny Flat Loans, you will also need to check which of the two most common ways of financing will best suit your construction method and your cash flow.
Options 1 is to revalue the property and use the existing equity to fund the construction. This is the easiest way but often only suit existing properties. We can easily check if this is possible with our free property reports.
Option 2 which is more common and often the only option where you only recently purchased or are just about to purchase the property is to do a loan based on the end value of the property. Here the lender will value the property as it is now and then lends against the value of the soon to be constructed granny flat. For a more detailed explanation of this process why not contact us for a complimentary lending review.
For Duplexes where you are knocking down and rebuilding the same process generally applies. The lender will value the property and then look at the cost of construction and work out an end value against which they will lend. Every lender is different though and many will only consider lending where they have seen the original property so please contact us before you knock the old house down no matter how old it is.
Development Finance – Construction Loans
Beyond the granny flats and duplexes are the large developments. This includes subdivisions, building apartments and commercial properties. These loans are based on the quality of the presentation and the overall risks involved to the lender. For this reason, Awesome Commercial Lending works with a team of professionals to provide solutions for the construction of retail, industrial, commercial offices or multi-residential properties.
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