APIA Blog

RSS Feed

Toby Yorke: How I would renovate with a $20K budget

Monday, February 17, 2020

IMAGE CREDIT: UNSPLASH

In this day and age, a $20,000 renovation budget won't get you terribly far. So where should you put your hard-earned dollar?

The Goal

I’m a big believer in the “goal drives the strategy” approach. What’s your goal? Is it to increase cash flow, increase equity, sell or is it simply maintenance?

Once you are clear about your desired outcome, then chat with the respective parties involved.

  • If your goal is increasing cash flow, ask your tenant what they would pay more for. 
  • If you want to increase your equity position and add value, chat with your valuer. Why not take them out to lunch and pick their brain? It’s cheap advice. 
  • If you plan to sell, ask a few real estate agents or your listing agent what their buyers are after. Don’t assume that you know what will work: be open to advice. You don’t have to take it, but you do want to be making an informed decision.

The traditional renovation always includes the kitchen and bathrooms, but you need to be able to validate your decision. Will the investment of a $10k kitchen give you a multiplied return on the investment or should you just replace the faces?

Another factor that you may like to consider is rentability. Rundown homes tend to attract rundown tenants. If you want to attract a house-proud tenant who will take care of your property, pay on time and in full, then you will need to have a home that attracts that type of person. You may get away with old carpet, but a couple of coats of wall and ceiling paint will likely lift the house and make it feel more like a home.

Best Bang for Your Buck

With a small renovation budget, look for the biggest bang for your buck and remember to consider the street appeal. A $50.00 letterbox and a painted fence may help to get your property let more quickly, as most prospective tenants will do a drive-by first. If your mailbox looks like it’s been in a fight with a tiger, get rid of it. Last year I sold a property down a right-of-way, and I convinced the other owners to pay for some of the paint to repaint the fence. I did a cheap and cheerful job and even replaced some mailboxes at my cost. Why? Street appeal: if the place looked like a ghetto (and it was a ghetto) nobody would come any closer. A few hours work and a few hundred dollars paid big dividends for me, as I sold the house for top dollar.

Whilst not directly a renovation, last year I was exploring the option of adding garaging to a development. Based on research I carried out, it seems a garage may increase my income by $20-$30 per week, whereby a room would increase my income by over $100 per week. Because I am not looking to sell, and cash flow is more important than garaging, I won’t be adding garages.

Talk to the Experts

In a similar vein, I had a conversation with a registered valuer about tiling the bathroom. Should I tile the floor, shower and walls? It’s looking pretty after all. The short answer was no. I have therefore decided to part-tile the walls only. This will cost me a whole lot less and still create a ‘wow factor’ without breaking the budget, and it will help to avoid potential maintenance issues down the track. Doing up the bathroom, even a little, will help to command a high rent.

In closing, if you’re clear about your desired outcome, you ask for advice and implement your $20,000 renovation based on data, you won’t go too far wrong.

Toby Yorke has been investing in single-family homes since the late 1990s and has owned multiple dwellings in a variety of cities around New Zealand. He recently consolidated his portfolio and is working toward early retirement using property investment as the vehicle.

 


ABOUT THE AUTHOR

Toby Yorke

Toby is a long time APIA member and a frequent contributor on the APIA Facebook Group

 

 

 

 

 

Recent Posts


Tags

lvr rent arrears Landlording recycling equity data security television rta reform return worksafe off the plan damage ventilation productivity capital gain first home buying renovation CCC education property management advice warm up new zealand Market report HHGA Must know Guest blog Question and answer sublease partners development skill shortage Sponsored post mortgage insulation rental wof meth contamination property cycle property business fixed-term tenancy Jeff Bezos shower dome RTAA 2019 Investment tip tax meth Must knows auckland airbnb unitary plan maintenance cash-flow robert kiyosaki market rent property value ring-fencing investment strategy Holler rent speculator nzpif Level 4 gluckman report extractor fan bond trespass cat tenancy tribunal khh Kris Pedersen Mortgages and Insurance Tribunal case study Standards New Zealand cgt finance housing affordability anz short-term rental wealth creation winz tenancy services election 2017 auckland council Investor story buying beginner investor structure buying rules How to letting management housing bubble holiday house HHS interest only banking initio ird Case study CoreLogic water bill Gluckman heater negotiation house prices mindset clnz scotney williams Editor's Choice minor dwelling subdivision legal Q&A covid-19 market tenancy issues letting fee equity interest rates wins property maintenance reserve bank insurance landlord bond form parry v inglis watercare p lab boarding house TCIT tenant investor rental market HSWA twg report smoke alarm government LIM ask an expert personal growth RBNZ building principal and interest bad tenant privacy ocr rent increase buyer's agent financial advisers act sale and purchas DTI relationship Property (Relationships) Act inspection trust heating income debt enforcement termination trademe warren buffett positive cash flow rta asbestos sale and purchase

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo Keith Hay Homes logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited