$2 of value per $1 spent, or walk
Renovation ROI Calculator - equity and yield, separated
A renovation pays twice - once in equity, every year in rent. This prices both, so you can tell a value-add from overcapitalising with nice tiles.
The renovation
Equity created (after the spend)
$40,000
$100,000 uplift on $60,000 spent - 67% ROI (below the $2-per-$1 bar)
Rent uplift
$90/wk
Yield on cost
7.8%/yr
Payback from rent
12.8 yrs
A renovation changes the numbers the deal was judged on. The full audit re-runs the whole deal against your buy box once the work is priced in.
Deal Auditor - in build, not yet available
Excludes holding costs during works, selling costs if flipping, and tax treatment (improvements claim at 2.5%/yr as Div 43 - see the depreciation calculator). General information only.
The two-dollar rule, and why renovators break it
The discipline is simple: target at least two dollars of value for every dollar spent, measured against what renovated comparables actually sell for - not against what the work cost, and not against optimism. The margin matters because everything leaks: holding costs while the property sits empty during works, cost overruns, and the valuer's conservatism when you refinance to pull the equity out.
The rent side is the quieter win. An uplift that pays a 7-8% annual yield on the renovation cost is a better return than most whole properties earn, it compounds with every lease renewal, and it improves the serviceability picture for the next purchase. Run the renovated numbers - new value, new rent - through the Deal Auditor to see whether the improved deal passes your buy box.
Frequently asked questions
What is a good ROI on a renovation?
Investors typically target at least $2 of value for every $1 spent - a 100% ROI on cost - because selling costs, holding costs during the works and estimation error eat the margin below that. Cosmetic renovations (paint, floors, kitchens, bathrooms) hit that bar far more often than structural work.
How do I estimate the value uplift?
Comparable sales: find what renovated equivalents of your property actually sell for in the same suburb, and be conservative - valuers will be. The uplift is the difference between that renovated comparable and your current value, not what the renovation cost you. Banks revalue on comparables, not receipts.
Does the rent increase matter as much as the value increase?
They compound differently. The value uplift is one-off equity you can borrow against; the rent uplift is a yield improvement that pays every year - $90 more a week is $4,680 a year, which on a $60,000 spend is a 7.8% annual yield on cost before the equity gain. Strong renovations deliver both.
Are renovation costs tax deductible?
Not immediately - improvements are capital, claimed at 2.5% a year as Division 43 capital works while the property earns rent (repairs restoring something to its original state are different and can be immediately deductible). The distinction matters and is worth an accountant's confirmation before the work starts.