Tapping into the equity of your home is a great strategy for financing the growth of your property portfolio. But how can you ensure the banks play along with your investment strategy and lend you the money? Let’s take a look.
When buying an investment property most investors have two options for getting started. The first option is to save a large deposit in cash, however for the average salary earner this can take considerable time. The time taken to save $50,000-$100,000 can leave investors unable to keep pace with rising property prices.
The second option of tapping into the equity of your own home, can be a faster and easier way to build your portfolio. You could find yourself shopping for an investment property sooner rather than later.
So how can you tap into as much equity as possible? The answer is simple – ensure you get a great valuation.
There are many factors a valuer will look at that affect the final figure they give you. There is the size and functionality of the dwelling, and the size and location of the land. A favorable valuation often boils down to how well you bought in the first place. But this is just the beginning. There are many other things you can do to ensure you get the best valuation possible.
You only need to watch a few episodes of Selling Houses Australia to understand the dramatic impact presentation has on perceived value. Valuers are human too, and are affected in the same way a potential buyer would be. Ensure the property is neat and tidy, trim the gardens and treat the arrival of the valuer the same as if it was an open house. Many savvy investors will spend the money to have their home professionally styled to ensure it looks it’s best.
Provide recent sales evidence
Keep a record of all the recent property sales in your area, and have that information available for the property valuer. If you want to be really helpful, put together a written report detailing 3 or so comparable sales within about 500 m of your property over the past six months. Valuers are busy people and whilst they may be an expert in the area they may not be as up to date on local activity as you are. Make life easier for them.
Provide a rates notice
Some valuers like to see a copy of your municipal/council rates. They vary from one place to the next, but there will generally be a “site value” or “unimproved land value” figure reflecting the value of the land only. And sometimes there will also be an “improved value”, based on the land and building. The values are done on a statistical analysis. So it’s not accurate but it gives the valuer a good idea of where the property is sitting in the marketplace.
Make improvements to the property
If you have improvements to make, make them before the valuer comes around. It doesn’t matter if you have plans to do up the bathroom, because the valuer can only give a value based on what they see on the day. If improvements have been made to the property over recent times, provide a detailed and written list of works conducted and the cost of these. Even better would be project specs and a building contract, giving the valuer an idea of exactly what has been spent. Of course money spent does not equal value in all cases but it can add weight.
If you must make improvements stick to the kitchen, bathroom or outdoor areas as they add the most value.
So now that you know what you can do to improve the value of your property in the eyes of the valuer you have no reason for not achieving a top price. If you would like expert advice on how you can prepare your home for a visit from the valuer contact Innovative Property Advocates today for advice. Call on 0411 522 233 today.