A profitable renovation should be a key consideration when planning projects to enhance your lifestyle at home.
Taking on a property renovation project can be one of the most exciting and rewarding things you can do. It’s an incredibly creative and fulfilling experience but can also go terribly wrong if not planned out properly. So here are three quick tips to ensure you experience a profitable renovation AND the key improvements that will enhance your home.
A Profitable Renovation Tip #1: Have A Realistic Budget
Drawing up your budget before you start planning a renovation is essential. It’s possible to have two different budgets.
- purchase a property to renovate, or
- your current home and how much value to add without over-capitalising on the property
The second budget may be based on how much you are willing to spend on the renovation of the property. Dividing your overall budget into two – 1. mortgage repayments and 2. renovation budget – will inhibit your ‘spend’ mechanism.
It’s very easy to get carried away looking at your dream four-bedroom property. However, if you pour all your savings into purchasing a property then you’ll struggle to get more capital together to begin the renovation process. So establish what you have in the pot, the total of your savings, and how much you have for the mortgage and its renovation. Then research, with some professional help, how much the renovation will cost.
Consider whether you will hire an interior decorator, buy new furniture, replace key appliances, install heating and cooling, and landscaping.
It’s important to factor in a percentage of overall costs for unexpected expenses. Over-runs are often caused when altering the structure of a home, such as taking out walls, adding extra rooms, rewiring, and new plumbing. Factor in 10% – 25% of the overall renovation costs as a buffer for unexpected expenses.
Listen to the podcast with Mortgage Broker, Joe Tirimacco, who reveals great tips for saving, budgeting, and investing in real estate.
A Profitable Renovation Tip #2: Research, Research, Research
Before you start considering a renovation project, research the local area and its property market. This is an important activity regardless of whether you are renovating your home or buying another property. It’s important that you don’t overcapitalise and not be able to recoup expenses AND make a profit.
Contact local real estate companies that will be able to talk you through the best investments in the area and will be able to show you the properties that most reflect what you’re looking for. Vystal Property is an agency that deals specifically with properties for investment so you want to be looking for companies like this that understand your objectives for this renovation investment.
A Profitable Renovation Tip #3: Hire a Surveyor
A surveyor will help prevent you from experiencing any unnecessary and unpleasant surprises during your renovation process. Hiring a surveyor will help you to understand the structural needs of the building and any problems that the foundation or infrastructure of the building may pose.
Going through this process with a fine tooth comb is the best way to know what you would be taking on. So you can consider the amount of work involved and if your budget will stretch to that before you put any money down and commit to something that could, potentially spiral out of control.