How profitable is your home?

At some stage, your home may well be too small or big for your needs. Or perhaps the size is right, but you want to live in a neighbourhood with better amenities or in a suburb with excellent schools for the kids. If you’re paying off a home loan for a house located in an area experiencing solid capital growth, you may even make a profit when you sell!

According to the most recent RP Data Pain and Gain report, 91 percent of all home re-sales during the second quarter earned a gross profit.

In fact, nearly one in tHicks Real Estatee (30.5 percent) of home sellers at least doubled their purchase amount when re-selling! Referring to this bracket of sales, RP Data elaborated:

“The gross profit on these re-sales was $14.4 billion and the average gross profit per profit making transaction was $225,830.”

Are you living in a hot spot?

RP Data analysed re-sale statistics in states’ capital cities and regional areas. The area with the lowest proportion of re-sales that made a loss was Sydney (2.7 percent), followed by Perth (4.8 percent) and regional Northern Territory (6.4 percent).

In regional Western Australia, 43.4 percent of homes sold during the June quarter made a profit of 100 percent or greater, followed by Perth (40.3 percent), Melbourne (36.8 percent), Darwin (34.5 percent) and regional Northern Territory (33.9 percent).

So if you’re living in any of these locations, there’s a strong chance you could profit when you sell. But what about on a more local scale?

The best suburbs for making a profit

If you’re curious about which suburbs are posting the best figures regarding gross profits, the Pain and Gain report has all the juicy details.

The Sydney suburb of Campbelltown had the highest proportion of re-sales that made a gross profit (99.3 percent), while home re-sales in Ku-ring-gai scooped up the award for the highest median profit ($445,000).

There are numerous hot spots around the country. But aside from areas posting strong capital gains, how else can you determine whether you’ll make a profit?

Is it time to renovate?

It’s also worth considering whether to renovate your home in order to appeal to buyers.

But be wary not to drag your savings account through the mud by overcapitalising. This is when you spend more on renovation projects than you earn back when you sell — essentially a big waste of money!

Ask local real estate agent what buyers are willing to shell out more for — from large kitchens to modern bathrooms — and embark on renovations accordingly.

Story by Kate Wick, Story Source: http://www.ratecity.com.au