Does a Renovated Unit Get You Higher Returns?
Recently, a friend commented that she did not mind buying a house with only minimal renovations simply because if she herself were to renovate a property, it would most likely be limited to only the kitchen.
Clearly, every home buyer has a different view when it comes to the issue of renovation.
For some, if the property is for their own stay, the renovation must meet their expectations.
For example, if a potential buyer loves a dash of red here and there and the kitchen cabinets of a home he’s viewing are all in pearly white, it’s likely he won’t consider the property because the renovations are way too different from what he wants.
However, let’s assume an individual intends to buy for the purpose of renting out the property. He would most likely prefer a renovated unit then. In fact renting out a renovated unit would mean a much better premium compared to an empty unit.
Tenants renting a property would appreciate if renovations have been made to the original design. And none would go to the extent of only agreeing to pay rent for a place with renovations that met all of their expectations.
That is why renting out a fully furnished property is advisable too.
When buying, it makes more sense to buy a property that has undergone extensive renovations rather than carry out the renovations yourself, which will cost you both time and money.
If the typical price of a property in a particular area is RM500,000 and the renovation cost is RM100,000, it is highly unlikely that you will be able to sell the property for RM600,000.
A friend has more or less shortlisted what she has termed as a good buy – a unit with full renovations at a premium of RM20,000.
This is a very reasonable premium to pay because RM20,000 today doesn’t get you very far in terms of renovation. Even the renovation specialist will likely give you a sly smile if you tell him your renovation budget is only RM20,000.
In conclusion, it’s better to renovate as per what is needed and not so extensively to the point that when you want to sell, you feel that the buyer is shortchanging you because he is unwilling to pay for your renovation choices.