If you’re planning to renovate your home or investment property in order to save money, make sure you are aware of the hidden costs that can crop up.
Blogger: Jane Eyles-Bennett, Hotspace Consultants
The state of the economy during the recent GFC has led to an influx of do-it-yourself renovations; replacing new home building and purchasing. Over half of all home improvement projects end up going over budget. Be sure not to allow unexpected expenses to break your budget and spoil your chances of saving money. Here are some hidden expenses that you should be aware of before you begin your project.
Depending on where the home is located, you may have certain requirements on what types of work you can do before permits are required. The cost of these permits can vary widely in different regions of the country, from a few dollars into the hundreds, so be sure to research this before you begin. If you’re considering taking your chances without them, be prepared to be fined and subjected to surprise inspections.
If you are doing work to your home or investment property that you have not done before, you may not have the proper tools. Consider what equipment needs you’ll have before you begin. New equipment can add up to hundreds or even thousands of dollars to purchase!
If you’ve set a budget for a certain amount, try not to get sucked in by the options that are available for “just a little bit more.” Sometimes spending a little extra is well worth it; but splurging on every aspect of your reno is a recipe for a budget blow-out! Splurge on things like splash-back tile, kitchen handles, a nice vanity and good quality flooring.
Unexpected expenses happen most commonly when demo gets out of control, plumbing requires more than anticipated or old wiring is discovered once the walls are opened up. I always suggest my clients include a 10-20% cushion or contingency for such extras. Some costs simply will not be evident until after work begins, but you must still be prepared for them. Performing careful demo and determining the condition and placement of plumbing and wiring ahead of time will help you avoid these types of hidden costs.
There are various taxes to be aware of; including Capital Gains Tax and GST – depending on the types of renovations you’re involved with. Be sure to check these out before you begin any work as (depending on the value of property and renovation you’re working with) these extra costs can move the project into financially unfeasible territory.
About Jane Eyles-Bennett
Jane Eyles-Bennett is an interior designer specialising in renovating property for profit. With over 500 happy clients to her name and millions of dollars in extra profits generated for them during her career, her business Hotspace Consultants is who smart property investors turn to for guidance when embarking on a renovation.