Things to think about when renovating for profit
For some people, the purpose of renovating is to simply enhance functionality, increase aesthetic value and to enjoy a home more. But for others, it’s about making money. Regardless of whether you think your home is a forever home or not, factoring in the long-term value of a renovation is important. No exercise in life should be careless, especially when it comes to spending the big dollars and with the average value of an Australian renovation sitting at $47,984 according to the Westpac Renovation Report, it’s time we all started thinking about it.
So, to help you out, we’ve put together a list of the four critical things you should be thinking about before getting to work on your next remodel.
Because we’re considering a scenario whereby you already own and live in your property that you are renovating (if you are buying a property to renovate we say one thing: suburb due diligence!) you need to prepare. Do research about the market value of your property, what people are looking for at the moment, buyer trends, interior design trends. Befriend your local real estate agents and see if they can give you some advice or insight as to what could improve the market value of the property.
When making deciisons, you want to get right inside the buyer’s mind and think like they do. What would they want from the house? Is there a type of buyer you are trying to appeal to? Because if there is a key target market, you want to renovate with them in mind. For example, a large family would be looking for a home with plenty of space that can accommodate a growing family. Whereas a young, double income, no kids first home buyer is more likely to want something simple, not overly sizeable but something they could happily move into without having to outlay cash on improvements.
You need to watch every cent you spend when you renovate with the intent of making money because the tiniest over-expense can make a big impact. Founder of the Makeover Group, Richard Armstrong spoke to realestate.com.au and said there’s more to think about than just a simple expense report. “The timing of your work and the period for which you hold your property makes a big difference to your bottom line” so you should conduct a feasibility assessment with your accountant to estimate capital gains tax and repairs versus improvements.
Most importantly, you need to keep it simple. A buyer wants to walk into a home and be able to see themselves living in it and putting their mark on each space. Use neutral tones throughout the house with rooms that compliment each other and keep styling to a minimum when you actually go to sell the property. Fresh, airy and natural is always best and think about the less obvious details like lighting, flooring and tapware, cabinetry and so forth.