Reality renovations can create a financial blow
With television shows such as The Block Sky High returning to our TV screens, Propell National Valuers has warned investors to do their due diligence and ignore the fads.
“Not only can renovations add zero value and put the owner in deficit by the amount spent on the outlay, but done poorly, they can also [subtract] value from the property, creating an even more devastating financial blow,” said Propell's CEO Bart Mead.
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“Carrying out DIY jobs and home renovations can be a fantastic way to add value with minimal outlay,” Mr Mead said, pointing to last year’s Housing Industry Association report which estimated there would be a massive $30.4 billion worth of renovation activity in 2013/2014.
“Jobs under $10,000 are quite popular and if done correctly, can add significant value to a property and increase the selling price,” he continued. Keeping to strict lower budgets should ensure that most investors do not overcapitalise.
“It’s great that these shows are inspiring homeowners to look at ways to improve their property’s value; however, viewers should be aware of the various factors that need to be considered: local area legislation, by-laws, the planning required, contractors’ requirements and so much more that goes into successfully renovating a property," Mr Mead concluded.
Investors need to consider both the advantages and the challenges of DIY and renovation if they wish to avoid overcapitalising.
Top tips for aspiring renovators:
- Focus on kitchens and bathrooms (good aesthetics, size and practicality are key)
- Painting (aim for neutral colours and avoid feature walls – ensure good workmanship around cornices and on ceilings)
- Storage (build a garage, walk-in wardrobes or more cupboards)
- Consider the suburb (what do the buyers want? what type of property?)
- Set a solid budget (buy wholesale where possible)
“Homeowners should seek expert advice before embarking on a renovation,” said Mr Mead. “Making the right decision upfront will help protect the value of your investment into the future.”
