Renovate or not to renovate

Do you renovate before you sell, or just put it on the market as is? This is a big question and unfortunately the answer is maybe…it is not a simple yes or no. With so many variants at play, how do you calculate if you should put in the time, effort and dollars in to renovate before selling?

Must-do home improvements when selling

We have written many many times on the Blog about the importance of having a well presented property when you are looking to sell, so I apologize for repeating this, but it is super important. The other way to look at this is if you don’t do at least these 6 jobs, you’ll be throwing money down the drain:

  • The big property clean – you want your property sparkle
  • Touch up any chipped paintwork
  • Remove or store your clutter and any highly personal items
  • Fix any obvious detrimental defects
  • Tidy the front garden

Ensure you have the best possible street appeal – sweep paths, ensure your gate is working, your street number is visible etc

Treat it as a business decision

When deciding on whether you should renovate your property before putting it on the market – whether it’s your family home or an investment, you should look at it as a business decision. Will the renovations add value to your property immediately and will you be able to sell the property for more? You are not renovating your home so you can enjoy the end result, you are purely doing it to attract more buyers and add value. Don’t renovate with your heart or personal taste in mind. Think very carefully. We love ASAP!

Real Estate expert Andrew Winter says “if your home is a genuine renovator it is probably better to leave as is. Tidy up and do the essentials, of course, but recognize that this is an entry level home that may even have buyers fighting over it.”

He also suggests that “significant renovations are not advisable on homes that have been adequately looked after and are in line with your demographics expectations of size and style.”

Avoid overcapitalization

A priority if you are looking to renovate to sell, is to ensure you don’t overcaptalise, which means to improve a property beyond its resale value so you are not able to recoup the money when you sell. An example would be if a home owner spent $200,000 on home renovations and then decided to sell the property, they may find that the renovations only added $100,000 to the value of their property meaning they have effectively lost $100,000 as a result of doing the renovation. They have over capitalised on their property by $100,000. And that isn’t good! You need to do your research and think very carefully before renovating to sell.

Understand the current market value of your property

You can’t determine how much value a renovation will add to your property if you don’t know how much your property is worth before you event start. The first step here is to get your home valued by a qualified real estate agent.

Understanding how much your property is worth in the current market, how much it has increased in value since you bought it and how much other properties are selling for in your immediate area is very important. Plus, talk to your agent about the value of similar renovated and un-renovated properties in your area. Keep in mind that each neighbourhood has a median sale price and an upper sale threshold and this can vary significantly even within one suburb as a result of the housing style, street scape and demographics of each area.

What do your potential buyers want?

It is tempting to want to put your own personal stamp on your property, but some features you love, might actually put potential buyers off. Talk to your local LJ Hooker agent about what your buyer demographic would deem valuable, what features are really selling homes in the area. This is all about following the crowd, playing it safe, not overspending and never allowing your personal tastes to dominate. It is about giving your buying audience what they want.

Agents, whilst they aren’t building experts, can give you a good insight into what are popular features for buyers in your area. Consider whether your property has these features?

How much should you spend?

Once you know how much your home is worth and what your buying audience would value you can determine how much you want to spend on any renovations (if anything). Professional renovator Cherie Barber, who has been renovating properties for more than 20 years says, if you are doing cosmetic renovations like painting, floor sanding, ripping up carpet and landscaping and are looking to sell your home in the near future or you are renovating an investment, allow 10% of your property value for your renovation budget. For example, if your home is valued at $700,000 a good budget to work with is $70,000*.

She has some valuable insights into how much you should spend on each room here which would be worth looking at to give you an idea of room by room budgets here.

Renovating an investment property

If you are considering renovating an investment property you should consider things from a ‘need’ point of view; anything you do ‘needs’ to improve cash flow, rentability, or the value of the property.

You should ask questions like: Will it increase the rent? Will it increase the value? Am I better off without a renovation? It needs to be strictly a business decision.

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5 benefits of buying a house and land package?

You can choose the best design for you.

House and land packages offer you the option to customise your home. With 72% of home buyers claiming they would like to personalise their space and structure, this gives you the flexibility to do exactly that.

House and land packages and turnkey solutions are one of the easiest and fastest ways to buy a home that can be tailor made to suit a family’s needs.

Costs are clear

The price is normally pretty clear up front for house and land packages which is good for buyers whose finance is pre-approved. In many cases professional interior designers and architects are involved in every aspect of the design which ensures a high quality product without the costs associated with consultancy fees.

Technology advances gives control to buyers

With the likes of home buyers now have enormous flexibility to choose their perfect block of land, match it to their ideal design and select their preferred builder. The buyers are in total control of every step.

Up to 14% cheaper

A house and land package generally provides better value than an existing house in the same area. On average it costs about 14% less than a move in ready property.

First home owner grants

If you are buying a first home you may be eligible to receive the First Home Owners grant. Each state and territory varies but there are a number of great incentives for first home buyers buying a brand new property or buying land to build on.

Investor benefits

Because a house and land package is new, you’ll have a warranty if there are any problems. It will be easier to lease and likely to have few or no maintenance outlays. Plus, you can claim the maximum deprecation allowance on your tax return as new properties depreciate faster than existing properties.

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