Renovations - Are They Worth It?

Renovations undertaken on your principle place of residence are often treated a little differently to investment property renovations. If it is your home you will often spend a little extra to have it exactly the way you want it. However, if you are not planning on residing in the property for the long term, you should take the following into consideration to ensure that you do not over-capitalise on your renovations. After the property has been renovated you want to ensure that you will be able to get your money back (return on investment).

Tip 1 – Know the value of your property before you undertake the renovations. Contacting your local agent for a complimentary appraisal will assist with this process.

Tip 2 – Know your local market. What is the average price for similar properties? What is the lower-priced range? What is the higher-priced range? How are these properties presented? Even take the time if possible to drive past and view the properties from the street.

Tip 3 – What will your renovation cost? Always add an extra 10%- 20% on top of your anticipated costs and allow for contingencies (unexpected costs).

Tip 4 – Engage an expert builder or project manager to assist with establishing the overall renovation costs.

Tip 5 – The most popular rooms to renovate are the bathroom and kitchen as they offer emotional appeal to the tenants, buyer or investor.

Tip 6 – Improving the external appearance such as the lawns, gardens and external painting of the property is often money well invested. Make sure that the renovations are in keeping with the street appeal and don’t dramatically stand out.
And once again, don’t forget to take property resale values into account when you renovate.

Tip7 - Keep it neutral, when choosing colour schemes don’t be tempted to think outside of the square, stick to neutral colour schemes with walls, carpets & window furnishings. The last thing you want is to miss out on a potential tenant because their furnishings don't match the decor.

It is important to please yourself, but from an investment standpoint, you should make sure that potential tenants and buyers will also think your improvements add value.