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Make sure you know much extra value you expect to make from your investment of cost and time.
Profit always depends on a property’s asset type, style, location, age, condition and the appropriateness of its renovation works, experts say.
“I’m a renovator who runs an academy to teach people how to renovate for profit,” says Cathy Morrissey of The Reno Chick.
“I’ve been involved in seven renovations over three years – all created six-figure sum profits – and what I can tell you is you can’t put a price on how much value one single item will make to a home’s profit.
“It’s a whole picture that creates profit, not single items.”
With that in mind we took a look at the value of some common home renovations.
This depends entirely on the location and style of the property, says Justin Lilburne from JPP Buyers Advocates. Lilburne also buys and renovates properties and is a former real estate selling agent.
“Property gains for interior painting will depend on the style and location of the property,” he says.
“For example painting an estate home found in Pakenham or Berwick (in outer southeast Melbourne) and spending $3000-$5,000 will only (likely) gain $8,000-$10,000 value, while a period home situated in an inner-city suburb will need to budget $15,000 to paint (inside) however it could add upwards of $50,000 to its value.”
Cherie Barber of Renovating for Profit says “the very best return on investment for all the other rooms in the house (living, bedrooms, hall, etc) is paint”.
“It’s cheap, absolutely transforms a place and always gives the biggest bang for the buck,” Barber says.
Again, this question depends entirely on the streetscape of the property. What is the style of neighbouring housing? This will give you a idea of where to focus.
“When considering exterior paint, a freshly painted weatherboard will always outsell a brick home, however poorly presented and maintained weatherboard will struggle to compete,” Lilburne says.
“It comes down to street appeal; spending $10,000 could add $50,000 to $100,000 to the property’s value, provided the internals match (with the exterior impression).”
Morrissey recently taught a client on how to renovate for profit. The man, Danny, subsequently spent about $11,500 renovating a house in Penrith, Sydney including spending $3,000 painting its insides and $1,800 painting its brick front facade.
“While it is hard to have an exact figure of profit as he hasn’t had proper bank valuations done, a real estate valuation prior to renovating was around $400,000 and I can feel if he sold, he would have made $30,000 to $40,000 plus he got an extra $20 per week rent onto his property,” she says.
Landscaping or a new garden will usually add value to a property, provided it is easy to maintain and suited to the buyer’s needs.
“You also need to factor in if you are selling a completed product or are the purchasers going to further renovate and extend,” Lilburne says.
“If this is the case that garden has little to no value. However if you are selling a recently built or renovated home then, yes spending money on the garden to create a more usable and low maintenance outdoor area can add value to the property.
“The value gained will be depend the on the area, type, space and location of the property.”
The kitchen is often the focal point for a home. So spending $15,000-$20,000 on a new kitchen will add not only value storage and functionality to a home but may also boost its value, reveals Lilburne.
“This is my starting point with any renovation as it is usually the most expensive but also the most crucial part to any home,” he says.
“Always look at the useable space, not only prep area but also distance to and from the hob, sink and fridge. Gain will be dependent on style and quality of the fittings and fixtures.”
The experts say in most cases you can expect to add about $3 value for every $1 you spend on a kitchen.
If your pipes don’t have to be moved and you can simply update tired fixtures, re-tile and/or repaint a dated bathroom, and change light fittings it is possible to spend under $10,000. This could lead to a a valuation boost of $30,000 to $40,000. Again, the expert caution to assess your property type and potential buyer needs before you outlay a large amount of money.
According to Jordana Thirlwell, founder of Supercheap Storage and avid renovator if you installed a swimming pool on a 600sqm block with a 250sqm house, and spent $50,000 in total, you could gain about $75,000 more home value in the right market.
“The value estimate is based on the assumption the home is reasonably well located in its area,” Thirlwell clarifies.
We asked our experts to recommend the best renovations for $10,000. This is based on a 1960s-style brick home, where the owner has basic renovating skills.
What renovations can I achieve for $10,000?
According to Lilburne, with a budget of $10,000 you could:
With a budget of $20,000, you could do as above plus:
With a budget of $50,000, you could do also do the following (depending on layout and orientation of home):
As with any big project it’s important to seek the advice of experts before you start. Make sure you set a clear budget and stick to it to avoid overspending.
Article Source: Realestate.com.au
By Caroline James