In saying that Stephen ( my husband) and I have renovated every home we have lived in, and have always returned a good profit, our last sale was our lovely old sandstone home in Adelaide, which achieved a record price for the suburb. We did that even with some quite indulgent decisions.
Given that the family home is the biggest single investment most people will ever make it is extremely smart to look on it as just that: an investment and renovate wisely to maximize your return.
Renovating or Decorating?
Renovating falls into two categories
1. Structural - Changes in Functionality.
2. Cosmetic - Aesthetic changes
Structural renovations change the way you use the home such as adding a room, a story or reworking the floor plan etc.
Generally speaking a structural renovation will generate greater value because it will move the home into a higher price bracket.
Cosmetic renovations are generally related to decorating, changing the look of the existing structure and should move the value of the home into the higher end of the same price bracket.
The value of some cosmetic renovations will diminish with time where as the value of structural renovations should be timeless.
Develop a Master plan
A lot of people renovate their own home, bit by bit as they save the funds for each area for work,. While this might be great from a budget standpoint it doesn't always produce the best outcome. Even if you don't embark on the whole project at once, do all the planning up front so that you carry the same look throughout and you don't waste money by doing work twice.
Know The Numbers
If a return on investment is important to you, it is advisable to do some research in your area to get an understanding of market values. Look at homes on similar size blocks in similar streets but be mindful of external factors that affect the land price such as proximity to main roads, water etc.
For example, if you look at 10 - 20 comparable houses you can work out the price range 3 bedroom homes as opposed to 4 bedroom homes and know roughly how much value an extra bedroom will add.
Set a Budget And Stick To It
A rule of Thumb is 10 - 15% for a cosmetic renovation including kitchens and bathrooms and 25 - 30 % for a major structural renovation. Include a 10% contingency because where renovations are concerned Murphy's Law applies!!
Invest in Professional Design
This is essential. A butchered floor plan will devalue your property. Architects study for 5 years before they are able to practice in their own right. It stands to reason that in that time, they learn a thing or two about design. They understand the proportions and lines that are both functional and pleasing to the human eye. Good design adds value.
There is a vast difference between good design and making an architectural statement. If you are heading towards and architectural statement be aware that you will be narrowing your market when it comes to resale.
Be Resourceful
The cost of your materials such as appliances, sanitary ware, tap ware etc. are extremely flexible these days. You are now able to achieve the high-end look and quality for a very small spends. For example I like to install a toilet suite with an in wall cistern, I am now paying about a third of what I was five years ago and there is no compromise in quality. Even many local brands now manufacture overseas so there is very little difference.
If you must go with an expensive item, negotiate. When I renovated our own home I chose a $1400 basin for our ensuite. I did feel a tiny bit guilty about the extravagance but by the time I had finished with the negotiation I paid $850. The joy of looking at its magnificence every day was well worth the indulgence.
If your home is an older style home take care to avoid over spending with restoration. I have heard of people investing massive amounts of money in restoring heritage features.
While your restoration job may look amazing, no one will pay the true cost to achieve it unless you are resourceful. Source doors, windows and other features such as fireplaces from demolition sales or salvage yards. There also good ranges of reproduction hardware available at reasonable prices.
Beware of Bespoke
I always planned to install a walk in cool room into our home because I loved the idea of having massive amounts of refrigeration to accommodate our family and entertaining needs. It is probably fortunate that practicality got in the way of my big idea as it is definitely an indulgence that may even detract from the value of the home.
The point I am making is that something that may be your ultimate feature will probably not add value and may even devalue. So while you may still want to go ahead, make sure you are comfortable with the fact that you may not recover the cost.
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