If you are thinking about renovating your home for profit – that is, intending to put it on the market once the improvements have been made – there are some things you need to be aware of before getting started.
The most important thing is to understand what overcapitalising means, and how you might easily fall into the trap of doing it. To overcapitalise means to spend more money on your renovation than the end value that is added to your home. That is, if your home is currently worth $100,000 and you decide to do $50,000 worth of renovation work and then sell the home for $125,000, you have effectively lost $25,000.
The aim is to do $50,000 worth of renovation work but add $75,000 to the end value, meaning you’ve made a tidy profit in the end.
Some general tips for not overcapitalising are; do not get emotionally invested, work out your budget in advance and stick to it, include a buffer within your budget for unexpected expenses and keep the renovations within reason for your area or street. What this last point means is to take a look around and make sure your newly renovated house isn’t going to stand out like a sore thumb. If it is the most ultra-modern dwelling on a street of 1970’s style red bricks, you likely won’t attract the kind of buyer that would pay top dollar for your home.
Keeping all of that in mind, here are some tips for adding value to your home:
Knock out some walls
Organise the skip bin hire in Melbourne, get the sledgehammer out and go crazy knocking down some walls. Removing non-structural walls in a house can really open up the living space and give the impression that it is larger than what it is.
Some older homes can be filled with walls that create many small rooms. They may also have unnecessary space barriers such as swinging doors on archways or island benches in an already cramped kitchen. By opening the rooms up, you will allow natural light to flow through the home. If you knock out part of the external wall leading to the backyard you will also create a seamless inside/outside entertaining space. The better view of the outdoor area by removing the wall will also create the illusion of a larger house.
The only place where knocking out walls does not apply is for bedrooms. No matter how small they are, additional bedrooms are still worth more than a reduced number of bedrooms all up.
Bringing in natural light
Natural light gives a home an immediate uplifting effect. A house that is bright and airy will feel more livable than a dark house that feels musty and closed in. At the more expensive end of the scale, you could look at lifting the roof on one side of the house and installing windows up high for light all day long. You could also install skylights throughout or replace some walls with large windows or glass doors.
To let in light within a smaller budget, you can replace external doors with ones that have glass panels, change over heavy curtains for light coloured blinds and hang large mirrors near external windows so the natural light reflects into the room.
Kitchen and bathrooms
If you’ve ever trawled through real estate listings you may have noticed that a newly renovated kitchen or bathroom is one of the first things mentioned. In real estate value, these two things are important. However, these are the two areas you can easily go over budget or overcapitalise. Free standing baths, butler’s pantry, Caesar stone benchtops … the options are endless and it is up to you to decide how much is too much for your area and the style of your house.
A way to save a bit of money on the kitchen and bathrooms is to go DIY on tearing them out. For the cost of skip bin hire, and some tools if you don’t already own them, you can have the kitchen or bathroom back to a blank slate ready for the new one to go in.
It is said that landscaping can increase the value of a home by up to 15%. That is a considerable difference when you are looking at selling a house. Although landscaping costs can get very expensive, there are a lot of things you can do yourself to get it started or at least improve on what you already have. Planting new hedges or flowering plants, paving a walkway to the front door or installing a water feature in the backyard are all things that shouldn’t take you too much effort but will make a big impact on potential homebuyers.
A coat of paint
If you’re getting ready to sell right now and need a quick and easy fix, a fresh coat of paint is your best bet. A nice light colour to cover blemishes will make a huge difference to how the inside of your home looks. And even though it’s a bigger job, painting the outside of a house can help make a great first impression too.