[ad_1]
When it comes to renovating, the majority of home renovation projects are an investment that can add both value and appeal to your property.
But there can be a big difference between renovating your own home for aesthetic appeal and to suit your own personal taste, versus renovating an investment property with the goal of making a profit.
Each project requires a different approach and strategy, but overall, the pros and cons of property renovations generally remain the same.
The pros and cons of property renovations
Here’s a breakdown of the pros and cons of property renovation:
Pros
- Renovation has the potential to add value. A well-executed renovation can boost the appeal and value of your property.
- Renovation can offer new amenities to enjoy. Revamping the backyard into an entertainer’s delight, or transforming a small, poky kitchen into a chef’s ultimate dream can turn a ho-hum home into your dream house.
- Renovation is usually cheaper than shopping for a new home. If you’re thinking of cutting your losses and moving altogether, you’ll spend a small fortune on the agent’s commission, advertising, legal fees and stamp duty in order to move.
Cons
- There is the potential for the budget to overrun. Almost every renovation project is liable to encounter some sort of additional, unexpected cost at some point.
- There can be surprise costs. Once you begin renovating, you may unearth “hidden” work that requires an investment, but that doesn’t add any value. This includes things like plumbing and electrical work; they’re necessary, but they don’t add any new amenities or value.
- Potential for a low ROI (return on investment). If you’re renovating to add value, there are no guarantees that will actually happen, especially if the overall property market is slow or stagnant.
The average house renovation costs in Australia
If you’re ready to upgrade the kitchen, living rooms, bathrooms or backyard of your home or investment property, you’ll need to work out your budget upfront.
But this is where the estimations can get a little tricky.
It’s a bit like the question:
How long is a piece of string?
It’s not possible to give an accurate guide as to the average home renovation cost, for a number of reasons, such as:
- Your location. Different cities and regional towns have different levels of available tradespeople, materials and supplies, which all impact the final price you pay.
- Access to affordable and qualified tradespeople. It’s not just a matter of if and when the tradies are available, but also how much experience they’ve had working on similar jobs.
- The size of the renovation/the scope of work. A kitchen upgrade could be anything from a cosmetic refresh on a small galley kitchen through to a large-scale rip and re-do on a Hamptons-style space. One could cost as little as a few thousand dollars; the other, upwards of $50k.
- The age of your property. Older properties can require more upkeep and have “hidden surprises” lurking behind walls, like faulty electrical wiring and cracked pipes, which all add to the renovation budget when discovered.
- The quality of finishes will also affect your budget.
Another factor impacting the cost of your renovation is how much you intend to “DIY”.
Note: After all, one of the biggest costs of upgrading and renovating is the labour or the time your tradies spend on your project.
So if you plan to invest a lot of your own time into the project, that can help to reduce labour costs.
All of that said, it is possible to come up with some sort of estimate when trying to work out how much your renovation will cost by looking at the data..
The average house renovation costs in Australia are around $63,000-$72,000, though it varies from state to state.
For example, recent Suncorp Bank lending data found that renovations for households in Victoria were on average $71,067 and in Western Australia were much lower around $54,377.
Broken down into renovation types, average house renovation costs in Australia, would look something like this:
| Renovation type | Average cost – budget finishes | Average cost – medium finishes | Average cost – high-end finishes |
|---|---|---|---|
| Kitchen | 10-$15,000 | $15-$25,000 | 25-$50,000 |
| Bathroom | $5 – $12,000 | $12 – $20,000 | $20 – $35,000 |
| Living/dining/playroom/rumpus | $5 – $7,000 | $7 – $15,000 | $15- $20,000 |
| Bedrooms | $1 – $3,500 | $3 – $5,000 | $8 – $10,000 |
| Courtyard/garden | $3 | $5 – $10,000 | $10 – $25,000 |
Source: Online research and a number of different experts and sources
Steps to calculate your home renovation costs
The above guideline is handy to give you an understanding of roughly how much you can expect to spend on your renovation.
But how do you work out a more personalised, tailored budget that relates to your specific project?
Step 1: Create your scope of works
What specifically do you want to renovate?
For instance, in the kitchen, do you want to rip up the entire framework and start from scratch?
Or are you planning to reuse the existing framework, with the goal of giving the benches and cupboards a facelift?
Having a really clear idea of exactly what you want to achieve will help you work out how much you can expect to spend.
Step 2: Get quotes
Ideally, you want to get at least from 3 the tradespeople.
This is because their rates can vary wildly, depending on their experience, how busy they are and how much they charge.
Step 3: Work out your financing
There are a number of different ways to pay for a renovation, including using your own savings; tapping into equity by refinancing; getting a personal loan; using a credit card, or a combination of all of the above.
Your access to finance will determine your final budget and the total scope of the project, as well as the interest you can expect to pay along the way.
Step 4: Plan for the unexpected
One thing that is true of all renovations is that 9 times out of 10, something doesn’t go to plan.
More often than not, a few things don’t go to plan.
In fact, you should plan for your plans not to go to plan.
If you’re prepared in advance to problem solve on the fly, it makes the experience much less stressful.
To get prepared, you need a stash of extra savings (experts suggest an extra 10% of the overall project for “contingencies”) and a realistic timeline that ideally doesn’t add pressure.
Step 5: Finalise your project cost
Take into account your preferred quotes, the cost of finance and your contingency fund to come up with a final renovation cost.
You now have a guideline to work with as you kick off your renovation project.
Tips to renovate a house on a budget
- Scour second-hand options: One man’s trash is quite literally another man’s treasure. Review sites like Gumtree, Facebook Marketplace and online buy and sell groups for cheap deals. It’s not uncommon to find a true bargain: for instance, you might be able to leverage someone else’s scrapped renovation plans to score a new $300 toilet with a change from $100.
- Go generic for low-impact renovations: For instance, if you’re replacing a flick-mixer in the kitchen sink, you can choose from options as cheap as $30 and as expensive as $3000. The mid-range $200 option is often just as reliable and aesthetic as the fancy matte-black $1500 flick-mixer, and the property’s value and appeal remain the same.
- Spend money on high-impact upgrades: The money you saved on the flick-mixer? Invest it where it really makes a splash, such as on the luxurious waterfall edges on the 40mm stone benchtop.
- Make a splash with colour: Repainting a room with a fresh coat of paint in a modern colour is one of the lowest-cost, but highest-impact ways to transform the look and feel of a room. You can instantly create intimacy or refresh the aesthetic with just one weekend’s work.
- Update the lighting: Behind painting, swapping old, outdated light fixtures for affordable yet stylish lighting can give rooms an instant lift. While your electrician is there, ask them to update the switches at the same time: fresh, white, modern light switches add to the “new” vibe.
- DIY whatever is feasibly (and safely) possible: As we mentioned earlier, the biggest expense in renovations often boils down to labour. If you can take the lead on projects like ripping up the carpet, demolishing fences, chipping away at tiles or deconstructing cupboards, you could save hundreds (potentially thousands) in labour costs along the way.
Renovating your home or investment property can be a smart and strategic way to manufacture growth and boost both the appeal and function of your property.
Whether you’re looking to increase the home’s overall footprint with new spaces, or simply renovate to improve the existing structure, there are plenty of options.
But it’s easy for first-time renovators to over-capitalise and end up spending more than they wanted to, or achieve results they’re not 100% happy with.
It’s a good idea to be as clear as possible with your goals upfront by weighing up the pros and cons of your specific renovation.
This, together with a clear budget and realistic quotes and tenders, can help you make an informed decision about whether a potential renovation project is worth tackling.
Note: There is an easy way to boost your investment assets through renovations.
If you’re thinking of increasing the rental returns on your investment property or “manufacturing” some extra equity by renovating, talk to our Melbourne-based renovation team, Metropole Renovations.
We specialise in helping investors maximise the returns on their Melbourne properties – hassle-free.
- We will:
- Help you unlock the “potential” of your investment property
- Take care of all the time-consuming and difficult tasks involved in renovating
- Provide a no-cost, no-obligation fixed price quotation with a 7-year builder’s guarantee on all works performed
- Guarantees the completion date of the renovation and co-ordinate with your Property Manager in order to minimise the time your property is vacant
Many of our clients add value to their established investment properties by undertaking a renovation.
Refurbishing your investment property can increase the rental return, increase your depreciation allowances, increase the property’s value and manufacture some capital growth that can be used to build your investment portfolio.
Want to explore your options? Click here now, leave us your details and let’s have a chat.
ALSO READ: Your Complete Guide to Renovating for Profit
[ad_2]
Source link
