Renovating for value — or renovating for you?

13 Aug Renovating for value — or renovating for you?

Renovating a home can be exciting. A new kitchen, an outdoor entertaining area, an extra bedroom or a beautifully landscaped garden can completely change how a property looks and feels.

But before choosing tiles, appliances or paint colours, there is a much bigger question worth asking:

Why are you renovating in the first place?

Are you preparing the property for sale? Trying to increase its long-term value? Creating more space for a growing family? Planning to stay for another 20 years? Or simply creating a home you enjoy living in?

The answer matters because a renovation that makes perfect sense from a lifestyle perspective may not necessarily deliver the same amount back when the property is eventually sold.

Top 5 Renovations That Can Add Value

Kitchen ImprovementsThe kitchen is often one of the first areas potential buyers notice. Improving benchtops, cabinetry, lighting, storage and appliances can modernise an entire home.

Importantly, a valuable kitchen renovation does not necessarily mean installing the most expensive kitchen available. Sometimes refreshing cabinetry, replacing handles, upgrading appliances and improving lighting can deliver considerable impact without the cost of a complete rebuild.

Bathroom RenovationsOld, tired bathrooms can quickly date a property. Modernising showers, vanities, tapware, tiles and lighting can improve both presentation and functionality.

Neutral colours and practical designs can also appeal to a wider range of future buyers.

Adding an Extra BedroomWhere the floorplan allows, converting unused space into an additional bedroom may significantly broaden the property’s appeal.

For example, moving from three bedrooms to four could make the home attractive to larger families, although the additional room should not come at the expense of important living space.

Improving Outdoor LivingAustralians generally love outdoor entertaining. A well-designed deck, patio, pergola or alfresco area can effectively create another living zone.

Connecting the indoor and outdoor areas can also improve the overall feeling of space within the home.

Street AppealSometimes the best improvements are the simplest.

Fresh paint, landscaping, fencing, lighting, a renovated entrance or improved driveway can significantly change a potential buyer’s first impression before they even walk through the front door.

Top 5 Renovations That Could Over-capitalise Your Property

Over-capitalisation occurs when you spend more improving a property than the renovation is likely to add to its market value.

An Extremely Expensive KitchenInstalling a $100,000 designer kitchen into a modest suburban property does not automatically increase the home’s value by $100,000.

The renovation needs to suit the property and the surrounding market.

Luxury Swimming PoolsPools can be fantastic lifestyle additions, but they can also be expensive to install and maintain.

Some buyers will see a pool as a major attraction. Others may see maintenance, electricity costs and lost backyard space.

Highly Personalised RenovationsWine cellars, elaborate home cinemas, specialty hobby rooms or unusual architectural features may be perfect for you but offer limited value to someone else.

Building Beyond the NeighbourhoodCreating the most expensive house in the street can sometimes limit your return.

Property values are influenced by surrounding homes, land values, location and comparable sales. There may ultimately be a ceiling on what buyers are prepared to pay in a particular area.

Expensive Structural Changes With Limited BenefitMoving walls, relocating kitchens and bathrooms or substantially altering rooflines can quickly increase renovation costs.

If these changes do not significantly improve the home’s usability, size or desirability, recovering the expense when selling may be difficult.

So, Why Are You Renovating?

This is perhaps the most important question of all.

Not every renovation needs to generate a financial return.

If you intend to live in your home for another 15 years and a swimming pool, luxury kitchen or large entertaining area will bring your family enormous enjoyment, the renovation may still be worthwhile.

That is a lifestyle return, rather than purely an investment return.

But if your primary objective is selling the property within the next few years, the numbers deserve much greater attention.

Before undertaking a major renovation, consider speaking with local real estate professionals, builders and appropriate financial professionals. Understand what comparable properties are selling for, develop a realistic renovation budget and allow for unexpected costs.

The best renovation is not necessarily the biggest or most expensive.

It is the renovation that achieves what you wanted from the property in the first place — whether that means increasing its value, improving your lifestyle, or finding the right balance between the two.

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)