How does the process of securing finance for your renovation work? And how does the type of renovation you are doing impact this?
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PODCAST TRANSCRIPT:
I thought I would take you through, for those of you out there who are looking to do renovations, whether it's structural or non-structural, and the key differences between the two and how financing can have an impact on that. I guess the first thing I want to talk about is what's the difference between structural and non-structural renovation improvements.

Non-structural improvements are generally your painting, carpets, pulling out a kitchen, bathroom and things like that. Obviously, all cosmetic is what we would say and value adding in terms of just working within the property you've already got, whether it is a house, a unit, townhouse or whatever it is and actually value adding and improving the inside look and feel, sometimes the outside as well.

Then you've got your structural improvements, this where you start taking things out. Potentially taking the roof off and putting a second story on, adding extra rooms at the back and any thing that really effects the current bones, I guess, of the property that stands there at the moment.

If we talk about a structural improvement or renovation, because you are addressing and amending the actual subject property, generally to finance that you'll get a full contract. It's obviously normally substantial works, you know, so $100,000 and above, $100,000 to $400,000 if you're doing a major renovation improvement and a value add to.

With that, not generally to dissimilar to actually getting new homes build. You'll get a contact. There'll be stages where the builder will want to be paid as they complete the work so it will go through that process. It's quite simple, we get the banks involved, we do progress draw downs that are detailed in the contract, they will often want to go out and inspect the property, make sure the work is being done to a standard that they are happy with and then they make the payment.

The difference with the non-structural is generally you're looking at a far smaller investment. You're generally looking somewhere maybe between $20,000 and $75,000. At the other end we're obviously doing some significant bathroom and kitchen, really probably, gutting the whole property and starting again. An average renovation, I'd say, costs around about $50,000 in a unit to do a kitchen, bathroom, redo the flooring and redo the air conditioning and heating and things like that. A good splash of paint and modernise the place. How do you do that?

I think there's a couple of different ways. For clients that have access to the funds, be it with other borrowings or cash, I think the easiest way's for you to self-fund that. What I mean by self-fund is you do the works and don't have a banking involved or progress draws and things like that.  By doing that we can often get in somewhere between 6 and 12 months a better uplifting value. If you've got the right property, if you've done the right renovation work and, of course, the market has a key factor on that, so if the markets risen and we've got some comparable sale of renovated units.

There might be times when we can't get those comparables and it might affect your end value but by doing that we often see, let's say for example you take a $500,000 property and we do a $50,000 renovation, logic suggests that it's now worth $550,000. We've got examples of really good property in the right place and actually getting them re-valued at around the 9 to 12 months later down the track at $600,000.

Of course, factors need to go our way and we've been enjoying our rising property market so whilst that's going ahead,