Renovating adds instant value to an established home. Firstly, you can you increase your capital growth, even in a stagnating market. Secondly, you can also rent the property for more when complete. Other benefits include less maintenance, a higher occupancy rate, and greater depreciation. But, it’s also important to set your budget before you start renovating and for you to plan carefully.
1. Increased Capital Growth – Home valuation experts suggest that kitchen and bathroom upgrades added the most value to a home. Additional upgrades that are value adding include painting, increasing storage and entry and alfresco updates. Making these changes can add thousands in value. Nevertheless, just remember that sometimes spending less, can mean more. Spending $50,000 on a kitchen does not mean that you will automatically increase your home’s value by $50,000. So, before you start any project, think of cost saving ways to renovate so you maximise your return.
2. Higher Rental Fee – Updating a kitchen and bathroom, or putting in new flooring often modernises a property. Thus, you can increase your weekly rental price and make more from the home.
3. Less Maintenance – Upgrading areas within a home typically reduces the amount of repairs needed. For example, you will not need to fix leaks or replace tiles in an old and tired bathroom if you have renovated. In fact, years may pass before you need to anything.
4. Higher Occupancy Rate – A home with a brand-new kitchen and bathroom will attract more interest. Plus, prospective tenants will want to live in the home for longer.
5. Greater Depreciation – Any costs to upgrade a negatively geared investment property is tax deductible and depreciable over time. Just be sure to get a depreciation schedule done for your accountant after the renovation is complete. This schedule will allow you to claim the maximum amount for any renovation work you have carried out.
If you are trying to limit your costs, then there are some simple projects that you can do yourself. These are as follows:
Flooring – To rejuvenate tired floorboards simply hire a floor sander and buy some varnish. You can also replace worn carpet. Such projects can cost around $5,000 but will add as much as $20,000 to the value of a property.
Kitchen – Replacing a whole kitchen is expensive. So, look at changing cupboard doors or painting over existing doors to give the area a facelift.
Painting – The interior and exterior of a home can dramatically change with a lick of paint. Sanding, then applying a fresh coat of paint adds more than $20,000 to a neglected home.
Landscaping – The entrance to a property and it is street appeal are big draw-cards. Therefore, if your home does not have a garden, then it is time to plan one and to get planting. You can add $15,000 to the value of your home by using recycled paving. Other great ideas are adding a shade sail, turf, and mulch, and planting screening and garden vegetation.
Successful renovating comes from effective planning and knowing what you are doing. Consequently, if you are not a builder, then do not just start knocking down walls. Instead, plan what you would like to do, then visit a builder to find out what these changes will cost.
Inexperienced renovation of large-scale projects can cost more than you anticipated. Renovations carried out incorrectly can alter the buildings structural integrity. Also, it can devalue a home. Bad do-it-yourself projects make it harder for you to sell or rent the property.
You also need to find out what adds the most amount of value to your home before renovating. This approach will stop you from over-capitalising.