The real story: Renovating to sell
Australian property owners don’t shy away from renovations. In fact, Australian Bureau of Statistics data shows that in the last quarter of 2018 alone we spent a record of $9.89 billion across the country on property alterations.
Renovating to enjoy your new home yourself and live there for many years to come is one thing. But if you are renovating with a view to selling, you should approach your renovations with a clear investor mindset. So let’s dive into what you need to consider before you start to tear down the walls.
Get your investor mindset ready
While there are certain renovations that generally make better investments than others, it can all differ depending on the market you’re selling in. So the most important thing you can do if you’re planning to renovate before selling is to detach yourself. You need to renovate with your target audience in mind.
This is where talking to an agent about your renovation plans is priceless. There’s a very good reason that all the renovate-for-sale shows consult an agent fairly early in the process. A good agent will offer advice on what will add the most value, and most importantly, what they know buyers in your area are after.
Renovations that add the most value
Generally speaking, there are some renovations that, if done wisely, are likely to add more value to your property. Here’s a list of what’s likely to spark joy with most potential buyers.
Exterior – first impressions start before a potential buyer steps into your property. Investing in some clever landscaping, outdoor painting or a new fence, can send dream home vibes to buyers as soon as they set eyes on your house.
Painting – this is another simple yet very effective way to make a great first impression on potential buyers. When done well and with taste (by which mean the right, neutral colour), a fresh coat of paint can change the feel of a home considerably.
Kitchen – here’s one of the most important rooms in a house, and also one of the most costly to renovate. Go for classic colours and fittings, and keep a close eye on your budget. Kitchens are quite expensive and require more time and effort than other renovations, so the return on investment can actually end up being lower than other improvements. Depending on your neighbourhood, buyers might be more interested in putting their own stamp on their future kitchen, so some very light touch-ups and styling might be all that’s needed.
Bathroom – if you can get away with just updating fittings without major plumbing works, then you might get away with spending around $10,000. A complete overhaul can cost much more, but bathrooms are a big selling point. If you have an older style home, renovating a bathroom, or even adding an ensuite can make your home appealing to many more buyers.
Extra rooms – going up, out or under by adding extra rooms like bedrooms, a study or an extra bathroom, can be an effective way of pushing your house into a different price point with a different target market altogether. But it’s a lot of work. You need to have the mindset of a developer and bear in mind this type of renovation needs to be done right to be successful – if you’re adding two bedrooms, logically buyers will expect another bathroom to go along with them. And adding rooms typically involves more serious financial investment and structural alterations (which can be a can of worms).
How much should you spend?
It’s crucial to crunch the numbers early on. You want to aim for at least 50% return on all your renovation investments.
There’s a fine balance in renovating to lift the price of a property and spending too much on something that won’t get you a higher sale price. Don’t go overboard and overcapitalise, or invest more than you can recoup. By the same token, if it looks like a DIY project rather than a professional reno, buyers will notice and it will affect the sale price.
Before you rush into major decisions, sit down and figure out exactly how much the renovations will cost you, and what is the projected, achievable return.
Renovations are not an exact science. In fact, they can be quite stressful, messy, and hit and miss if you don’t approach them carefully. Prices can quickly spiral. So spend some time carefully planning, budgeting and talking to the experts, and you should be on the right track to a profitable return.
Want to turn your renovation into a successful sale?
Book a chat with an experienced Di Jones agent today and start your renovation journey on the right foot.