When renovating your home to add some value, experienced property investors like Patrick Bright suggest aiming for a $2 return for every $1 you spend. Depending on context, this isn't always possible. But if you are strategic with your resources -- money, time and effort, getting close isn't out of the question. Here are 10 things to keep in mind as your reno approaches.
Renovation planning via Shutterstock
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1. Don't over-capitalise
Creating value is about being cost effective in your decisions and not spending more than your category of house could fetch on the market. Set reasonable expectations of your property's market price, and work towards that. From there, always consider whether someone would be willing to compensate you $2 for the $1 you spend. This is often easier with smaller rather than big spends -- installing sound, security systems and smartphone control are all relatively inexpensive ways of giving a home a premium feel.
When tackling bigger projects, like landscaping or the kitchen, consider what impact smaller changes could make. If you're just tidying up the garden, try re-turfing and low-maintenance varieties to more expensive plants. Rather than replacing the kitchen outright, see what you can accomplish with some new surfaces and handles. And all over the house, new lighting, curtains and blinds can be quick and cheap ways of making a face feel bigger and warmer. It's all in the details.
2. Keep buyers in mind
It's really tempting when you're renovating your house to jam it full of stuff you like. But remember, value comes from how much other people are prepared to pay. Buyers must be able to imagine themselves moving in effortlessly. This can be hard if you've painted a bedroom dark purple or installed Spiderman wallpaper.
So, decorate your house as inoffensively as possible -- minimise loud colours or amenities that only appeal to a small segment of the population, like extra-high bench-tops. Simultaneously, add touches that appeal across the board, like installing a bathtub in the bathroom and lots of storage throughout the house.
3. Focus on the most important rooms
Not all rooms were created equal, and kitchen and bathrooms rule the roost. If your bathroom or kitchens feels dated or rundown, that feeling can extend to the entire house. Several experts recommend spending between 1- and 5 per cent of the value of your property on updating bathrooms and kitchens -- this is about the value of your house that kitchens and bathrooms represent.
Fittings in the kitchen and bathroom are particularly subject to wear and tear, trends and technology. You don't necessarily need the newest or most expensive faucets and gadgets, but this may be an area to splash out. Other things to pay extra attention to are grouting, tiles, counters, skirtings and handles. On top of rejuvenating what's there, experienced investor Patrick Bright recommends adding "designer" touches, like shower screens in the bathroom, and glass splashbacks in the kitchen.
4. Create a good first impression
As with people, first impressions matter. Your kitchen and bathrooms could be the envy of the world, but unless your garden and entrance have quality to match, potential buyers may never notice.
Paint the fence, front door and entrance a warm colour to grab some attention and make sure there aren't any visible cracks or cobwebs. If you have a front garden, landscape it simply and elegantly. If it's an apartment, invest in some potted plants to bring some life to the entrance.
5. Seek expert and local knowledge
You can never have too much information when you're investing, whether it's your time or money. Before embarking on a renovation, consult a local real estate agent or developer. Find out the trends in the neighbourhood, what buyers will be looking for when they come round to inspect. Make sure to keep an eye on planned or ongoing improvements in the area, like new or expanded roads, shopping centres and schools - these should change how you approach the renovation.
All neighbourhoods have different quirks - you might be rewarded for converting a garage into a den in some suburbs, while others value off-street parking. If the area is a hotspot for new families, you may want to look into creating an extra bedroom or dividing the living area to make a play space for the kids. Otherwise, that space might be great for an office or cinema.
6. Have plans and make haste
The longer your renovation takes, the more it is likely to cost you - in numerous ways. If you're flipping a house, the longer you own the property the more your profit will be eaten into by loan repayments and taxes.
Even if you're planning on enjoying the fruits of the renovation for a while, a renovation that takes longer can cost more in terms of manpower and equipment hire. If you are doing the work yourself, a build that drags on will add to stress and takeaway from other things you could be doing.
These aren't reasons to cut corners -- shortcuts can come back to bite in other ways. Instead, try and plan out as much of the work as possible, and stick to the plan. Changing the design mid-way can lead to delays as you await new materials and figure out how to make it all workable. You might even need new planning permission. Once you have a plan, line up as much of the materials and jobs as you can to cut down on lead-time and make sure contractors aren't standing around on your dime.
7. Avoid cheap materials
Resist the temptation to cut down on costs with cheap materials. It may seem like a good deal, but in the long run it could cost you. Cheap materials can come back to bite as paint fades and flakes, cheap wood rots and seasoned home-buyers come round for an inspection.
On the other hand, investing in quality materials -- quality paint, hardwoods, tiles etc., can become a selling point as you talk to prospective buyers. People appreciate quality, especially when considering such a big purchase.
There are a couple of good websites where you can find quality new and recycled materials for less. See what you can find on websites like RenovatorAuctions.com.au, BuildBits and Gumtree.com.au before cheaping out at the local hardware store.
8. Look up subsidies and incentives
New technologies like solar panels, solar hot water, rainwater tanks and drip-feed irrigation can reduce the running costs of a house, and therefore make it more appealing. Up-front costs can be high, however, and mean that you won't recoup all of your costs when you go to sell.
But many governments offer rebates or subsidies for installing these systems, which can turn them into a good value-add. Before you commit to anything, investigate what incentives exist you can take advantage of, and whether your home could generate enough to pay back the outlay. Sites like Energymatters.com.au can tell you what subsidies are available for your area, and for what installation. We've written before about how to choose the right system for you.
9. Don't forget the outdoors
Don't focus all your energies on the inside. Much of Australia features a moderate climate, perfect for inside-outside living. If you have the space, building a deck, covered space, BBQ area, or even a pool could make your house more attractive to buyers.
Beyond outside living space, investigate whether local buyers would reward more parking, a granny flat, a work area or even a working garden and chicken coop. Depending on context, something more than a lawn can give you an edge when selling.
10. Hire experts for expert jobs
While some jobs may seem easy for the layman -- you don't need a license to lay tiles, for example, always consider whether DIY is appropriate for what you want to accomplish. Tiling, especially, is a job that can go horribly wrong. Professionally laid tiles can add a lot of value to a home, while shoddily laid tiles can detract significantly.
What's more, the time you spend tiling the bathroom is time you aren't spending doing something else. Do the math -- will you give up more taking time off work than you save hiring a professional to do the job? And will you finish it? Australia is covered in half-finished projects undertaken by the weekend handyman. If you really want to be involved, see if the tradie will take you on as a labourer - you can save some cash, speed up the process, and maybe pick up some skills along the way.
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