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While you keep paying off the loan and building equity, your property grows in value over time. Now let’s look at the active side of capital growth: capital improvement. This is also known as renovations, repairs or additions.
The trick to improvements is to add value to the property, without spending too much.
Don’t impress yourself when buying or renovating a property. Only spend money on those things that are valued by a potential purchaser. This may not reflect your own tastes.
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Impress the valuer
When it comes to smart improvements, you have one audience: the valuer.
The valuer is an independent professional engaged by lenders to appraise properties to buy or refinance.
Let’s say you bought a property for $500,000 and a year later you want to refinance it with a valuation of $550,000. The lender seeks an independent valuation to see if the property is valued at – or close to – that price.
What does the valuer look for?
First impressions count. Valuers are looking for things such as:
- A tidy garden and some basic landscaping and flowerbeds
- Well-presented kitchen and bathroom
- A fresh lick of paint
- Extras such as an adjoining garage, ensuites, ceiling fans, air conditioning, new carpets, etc.