More home owners around Australia than ever are electing to renovate their homes and investment properties. The main influence in choosing to renovate can be attributed to the many reality renovation TV programs, such as The Block, Renovation Rumble, and House Rules that are now becoming popular.
Unfortunately while these programs encourage home renovation and they show you the ‘before’ and ‘after’ of property renovation, as well as how much hard work is involved, they fail to show potential renovators how to budget, or how to financially plan renovation work before they start. Failing to plan and budget are the biggest downfalls of many home renovation projects. This leads to unfinished projects and many home owners over capitalising and having to sell property at a loss.
The good news is your home renovation project does not have to wind-up being a financial nightmare. Instead, with careful planning and budgeting you can make it a success that adds value to your property. Let’s look at how this is possible.
How to Plan Your Renovation Project
Yes, renovating can add value to your property, but this is providing that you work out your costs before you start, and you concentrate your efforts on areas that will give you the biggest return. It’s important that you don’t go over your budget when renovating and don’t ask for finance before you’ve worked out a strategic plan and budgeted for each aspect of your renovation project.
Ask for Expert Advice Before You Start Renovating
Contact two to three local real estate agents and invite them around to your property for a valuation. Let them know what you’re planning to do in terms of renovation, and then ask them how much value they think this will add to the property. This will ensure that you concentrate your efforts on areas in your home that will add value and help you to avoid over capitalising.
Give Yourself a Financial Buffer
When you ask for finance make sure that you add 20 percent to this figure as this will allow you to cover any unexpected costs. It will also ensure that you don’t run out of money to finish your renovation project.
Plan How You Will Manage the Renovation
It’s easy to say you’re going to renovate your kitchen or bathroom, but you need to work out exactly how this will happen, over what timeframe, and who will be responsible for certain tasks. You also need to consider if you can live in your home while work is being carried out. If you intend to live in the property, then you’ll need to work out the logistics of this. If you can’t, then you need to factor in the costs of renting or for storage while the work is being carried out.
Don’t Rely on Your Credit Card to Fund the Project
Using your credit card to finance your renovation is a big no-no. Your credit card incurs a higher interest rate so unless you can pay it off monthly then there are cheaper, more affordable options available. Instead of using your credit card, consider a line-of-credit loan. This type of loan is a pre-approved loan that you can draw on when you need to. You then only pay interest on the amount you’ve used.
Only Do-It-Yourself If You Have Experience
If you don’t know how to tile, build a kitchen or plumb, then now is not the time to start learning. Instead hire a professional and leave technical jobs to those who are qualified. Bad building projects are difficult to fix and can be a nightmare in terms of time, effort and cost to rectify. You may also find that doing the work yourself reduces the value of your property and leaves you with a property that is hard to sell or even rent.
Don’t Cut Corners
Being cost effective is one thing, but not doing a project correctly to save is an entirely different scenario. Cutting corners not only stands out when it comes time to sell your property or rent it, but it can also reduce the structural integrity of a property making it dangerous to live-in. Prospective buyers and tenants notice where corners have been cut and this then often makes them wonder if there are other problems that could be possibly be hidden from sight, which may turn them off buying or renting your property altogether.
Be Mindful of Changing Trends When Renovating
Yellows, purples and blues were popular colours in the 70s, but these quickly became outdated. If you’re renovating to sell, then think neutral and try to add a ‘wow’ factor to your property that the majority of people will like. This may mean rendering, painting or up-dating, rather than adding new bedrooms or a swimming pool.
Gardens Can Add Value When Renovating
If you’re looking to add a ‘wow’ factor then your garden can do this, but you need to be mindful of the season before you start planning and planting. Autumn and winter can be a difficult time for plants as heavy rain can give them root rot if drainage is poor, and frosts can damage leaves. In winter plant growth slows as the daylight hours are reduced and the weather becomes colder. This is also the time when lawns and gardens use up their energy reserves which means they become more susceptible to disease, weeds and too much care. This is why it is important to not over-feed, over prune or over water in winter, or over crowed garden beds and over mow lawns. Whereas Summer and spring can be the opposite.
Are you seeking to take out a property renovation loan? Then talk to eChoice we can help you find the right loan.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!