Question: Seeing as the market’s quite slow at the moment, I’m looking into renovating to add value to my properties. I’ve seen them as ‘set and forget’ investments so far, so am new to the world of renovation. How do I go about working out if it’s worth renovating, and what kind of renovations will increase a property’s value?
Answer: A renovation is often a strategic way to add value to a property. But before a renovation can be deemed worthwhile there are a number of things to consider: How do sales of renovated properties in the local market compare with original condition properties? Is the block large enough to accommodate an extension or an additional dwelling? Are there any council restrictions regarding zooming, permits or heritage overlays? What features are important to buyers looking to take residence in the area?
Should sellers choose to renovate, the answers to these questions are of significant importance in selecting the types of renovation to undertake and how much to spend on the project. There are numerous types of renovations that can add value to a property, some of which include:
- Larger, modern kitchens – the large walk-in pantry is back
- German appliances attract a premium
- Large bathrooms – a minimum of two, including ensuite, with a separate bath and shower with frameless glass shower recess
- Large separate laundries. Concealed ironing boards, bench space and chutes improve this space
- Restoration of a home’s period features
- Modernising updates to a non-period or limited appeal home
- Refurbished floors – exposed timber, American Oak, Ironbark and recycled attract a premium; large granite or porcelain floor tiles are also popular
- Outdoor entertainment areas, including outdoor ‘rooms’ and pergolas, outdoor strip heaters, artificial, maintenance free timber decking and lawns
- Additional bedrooms
- Additional living spaces such as rumpus, home theatre rooms, terraces and balconies
- Vehicle accommodation – especially in inner-city areas – basement car spaces attract a premium
- Floorplan and layout changes to increase functionality and flexibility and capitalise on natural light.
- Keyless entry, security systems and high-end home theater systems
- Green features such as underground water tanks, solar panels, energy efficient heating and cooling systems and low maintenance gardens
When deciding to renovate it is also important to consider where the property is located, the type of property (i.e. house or apartment), whether it is likely to be a rented investment property or owner occupied and who are the potential buyers or renters of the property. Put simply, sellers should renovate to their target market.
It is also important to be wary of overcapitalising in a property, as the amount spent on renovations may not offer an equivalent return in the increased value of the property. A good rule of thumb is to not spend more than 40% of the property value on renovations.
A well-researched and targeted renovation will ensure sellers capitalise.
- Answer provided by Greville Pabst, WPB Property Group (www.wpbproperty.com)
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