Homeowners and investors create equity and generate wealth by improving the value of their Principle Place of Resedence(PPR) or investment properties and then refinancing them or selling them.

Keys to make it work:

1. Avoiding overcapitalisation
2. Smart costing plan consitant with exit strategy
3. Maxinise sale price or rental yeild
4. Good budgeting, feasibility study and planning
5. Good stable of quality tradesman
6. Project management
7. Renovation standards in line with the market

Financial Requirements:

This strategy offers flexibility for investors.  Depending on the rate of return required and the funding availalbe, investors might not require a substantial amount of capital to finance the renovation.  Budgeting is essential while keeping a margin budgeted for delays and surprises to avoid getting into cash flow troubles.

Time frame and exit strategies:

The time frame to generate returns using this strategy ranges from a few weeks to a few months depending on the level of renovation, expected returns and method chosen.

Investors could either resell the property at a gain, or revalue by refinancing to hold it for future capital gain and immediate cash flow.  Full time investors might sell some properties and keep the ones with good rental income.

The return perspective:

Investors can posssibly earn a living using thiss strategy.  Some investors can execute 5-6 properties per annum makeng their living on the income derived monthly.

The advantages:

Investors using this strategy could start investing with a small amount of initial capital and gradually accumulate equity by leveraging their property.  It's one of the easiest ways to begin in  property investing.

The potential risks/difficulties:

Using the correct techniques and cost effectivelness, determines the return investors would get from a renovation deal.  There have been many investors who have failed due to bad planning, lack of experience, overcapitalisation and inappropriate expectations.

Timing the renovation is the hardest task.  It's not easy to keep all the components flowing flawlessly.  For example, the plumber might not be free when needed, or the electrician might not finish  job on time.  It's really frustrating when you can't move to the next stage because one tradesman has to complete their job in order for the other job to begin.  Projct management is invaluable.  Holding the property longer than planned because of problem management, increases the cost and creates added pressure on the overall project.