Get it right, and renovating your property can boost its sale value. But get it wrong, and a renovation can take a sizeable bite out of your bottom line.
It’s possible to add significant value to your property with a renovation. However, getting it right means walking the fine line between investing in the features that will delight your target market and seeing your profits fly out the window thanks to overspending on the wrong aspects of the renovation.
The secret to success is putting your personal tastes aside to focus on what your target market wants and what works in your local market – all while keeping your costs under control with a well-planned budget.
Here’s how to get it done…
Put your personal taste aside
Try to keep your renovations as neutral as possible. While you might love the idea of a bright red feature wall, the key is to appeal to a wide range of tastes. Keep bold splashes of colour to a minimum and invest instead in quality fixtures and fittings. The goal is to provide a quality blank canvas that your buyers can instantly envision applying their own interior design tastes without the need to spend big on other aspects of the home.
Focus on the target
The most important thing to remember when renovating a property for profit is your target market. Ask yourself who will be attending your open house and what they are likely to want to see. For example, a family may value practicality and storage over on-trend designer touches, while a professional couple might be more likely to forgo a little practicality for some ‘wow factor’.
Know your local market
The key to a profit-driven renovation is limiting your spend to the areas that will directly increase the market value of your property. To crack that code, you need to understand what’s in demand in your local market. Look at similar properties that have recently sold. Does a new kitchen and bathroom hike up the price, or is an entertainer’s deck a must-have in your local area? Comparing recent sales will help you to define a pattern of what works, and what doesn’t.
Don’t take shortcuts
It’s worth paying for craftsmanship when it comes to renovating a property for profit. A substandard DIY kitchen, for example, may not add value to your property if buyers feel they’ll need to re-do your work. And ensure any necessary council approvals are obtained – any unapproved structures will not add value to your property, and may even lower its market value if buyers fear they’ll be required to demolish your unapproved renovations.
You’ll need to keep very tight reigns on your renovation budget in order to maximise profits. Planning is key here. Know exactly what you’re going to do before you begin and how much it is going to cost. Spending more than 10 per cent of the value of your property on a renovation is generally considered a no-no.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.