When not planned wisely, the excitement of renovating can quickly turn into a costly headache.
The excitement of renovating and changing your living space can quickly lead to ignoring budgets and not thinking about the return on your renovating dollar. It’s all too easy to think it’s just a few hundred dollars more for a different tile for the bathroom, or a different kitchen bench top. Before you know it, those "just a few hundred dollars more" can lead to budget blow out with no corresponding increase in the value of your property.
Is it to increase your chances of a sale or a potentially higher sale price? Or is it that you love your home but want to make some modifications to meet your changing lifestyle needs?
If you’re renovating to increase your chances of a higher sale price, then focus on "big wins" for a smaller cost. You want to get as much return from your renovating dollar as possible – so focus on what is likely to increase the value relative to your spend. Adding on an extra room to make your three-bedroom house a four-bedroom house, refreshing the décor or doing some landscaping can all add value to your house, without breaking the bank – or the budget.
If you are renovating or making modifications for your own purposes and aren’t concerned about any increase in property value, then if you want that turret – go for it. Just remember though, that lenders prefer to lend on properties with a wide general appeal. Sometimes, having unique features will reduce the number of potential buyers, and you may find then that the amount the lender is prepared to lend will be less than they would lend for a standard house with no unique features. You may not be able to borrow as much as you want or need to for that renovation.
Sally loved colour so much, that when she decided to get rid of the tired old wallpaper in her 1930's bungalow, she couldn’t decide what colour she wanted to paint the walls. In the end, she made so many selections, that every room ended up being a different colour, and there was no flow throughout the house. Not only did having so many different colours blow out her paint and painter budget, when Sally went to sell her house, she struggled to find a buyer who appreciated the colour explosion as much as she did.
When painting or repainting your interior, using primarily neutral colours throughout all rooms gives your house a sense of flow, and generally makes the rooms appear bigger. Neutral colours also allow for personalised décor – pieces of art or colourful throws will not get lost or clash with bold and bright wall colours. By making the décor appealing to a wide range of potential buyers, the higher demand should increase the return on your renovation spend.
It was only five years ago that it was common to have plugs strategically installed for home theatre, speakers and surround sound devices throughout the house. Now, most top-quality home theatre systems operate off wireless devices and remote access via a smartphone, making all those well-placed plugs and switches redundant. When completing your renovation, try and think about future proofing your house, to ensure it retains a modern and relevant feel.
Fads come and go, but they forever date a house – anyone remember the orange formica benchtops of the 70’s? If you plan on selling after your renovation, keep the décor neutral, and avoid 'niche' features such as floor to ceiling mirrors on the wardrobe doors, or dark and overbearing cabinetry in your kitchen, to retain the value of your house. While you may like the look of gothic inspired cabinetry in your kitchen, again, this is likely to narrow the pool of potential buyers and may see you spending more on your custom-made cabinetry than increasing the value of your house.
Finally, when planning your renovation, plan your budget carefully and stick to it. Just remember to allow a small amount for the inevitable budget overruns, to ensure you don’t exhaust your available funds and live in an unfinished house while you save the rest of the money to complete the changes.
So, in summary, if you want to add value to your home through renovations, including features and using décor that will appeal to a wider range of buyers is more likely to see you increase the value of your home by more than your actual renovation spend. If you plan on staying put for a while, then you probably have more freedom to consider spending more on some of the personal touches that make your house a home for you.
Is it time to look at your renovation financing options? Talk to the team at RESIMAC Direct – we’re passionate about helping Kiwis enjoy their dream home.
See if you qualify. To get a more accurate idea of how much you can borrow with RESIMAC Direct,