Selling
Investor
Don't blow the reno budget
14-Aug-2018
A beautiful, renovated house that creates an emotional connection with buyers can help you secure the best price on auction day.
On the other hand, a half-finished renovation put on hold because of a lack of funds will be depressing to live in, and will hurt a home’s chance of selling for top dollar.
Inadequate planning is the primary reason renovations are halted halfway through, and it’s especially problematic for home owners who need to sell but don’t have the funds to finish the project.
Blowing the budget is almost inevitable for first-time renovators, who have limited experience in costing a project and may overlook the importance of accurate budgeting.
1. Prioritise planning
Starting a renovation without a plan will lead home owners to spend more than anticipated. Renovators often estimate costs too broadly, or focus on the big ticket items while overlooking the minute details and functional aspects of a renovation, such as plumbing and wiring. The major things people underestimate are all the things they can’t see. They’re more focused on how it looks.
It is suggested to break down the costs of every aspect of a renovation, room-by-room and item-by-item to assist with the process.
It’s about having a structure that you use when you’re pricing up, so you have a guideline to follow to know exactly the sorts of things you need to include.
2. Scrimp and splurge
A common reno risk is over capitalisation – spending more on a renovation than the new changes will add in value.
Look at recent sales and current values of properties that will have a similar level of finish to what you are producing in a similar area. You need to actually research what the market value will be in the end, even if you’re not selling.
Renovators can save by buying items from wholesalers or seeking suppliers who offer discounts for limited quantities or end of run products. However, homeowners should invest in the features of a property that will remain for the longest, including appliances, cabinets and benchtops.
3. Set aside a contingency
Unexpected costs are an unavoidable part of the renovation process and should be planned for in the budget.
Hidden damage such as bad wiring, rotting wood and termites, only uncovered once a reno is under way can be a headache. Permit fees for things like adding a swimming pool, extra room or garage can be costly.
Similarly, understanding what tradespeople will invoice for before works commence avoids expensive surprises.
Make sure you thoroughly read the fine print in any builder’s contract so you’re aware of extra costs for things like tools and materials.
To prevent a renovation from grinding to a halt, set aside at least 10 per cent of the total budget to cover unexpected costs. It might mean putting off a renovation to save for a little bit longer, but creating your dream home without hiccups is worth the wait.
SOURCE - Domain.com.au
On the other hand, a half-finished renovation put on hold because of a lack of funds will be depressing to live in, and will hurt a home’s chance of selling for top dollar.
Inadequate planning is the primary reason renovations are halted halfway through, and it’s especially problematic for home owners who need to sell but don’t have the funds to finish the project.
Blowing the budget is almost inevitable for first-time renovators, who have limited experience in costing a project and may overlook the importance of accurate budgeting.
1. Prioritise planning
Starting a renovation without a plan will lead home owners to spend more than anticipated. Renovators often estimate costs too broadly, or focus on the big ticket items while overlooking the minute details and functional aspects of a renovation, such as plumbing and wiring. The major things people underestimate are all the things they can’t see. They’re more focused on how it looks.
It is suggested to break down the costs of every aspect of a renovation, room-by-room and item-by-item to assist with the process.
It’s about having a structure that you use when you’re pricing up, so you have a guideline to follow to know exactly the sorts of things you need to include.
2. Scrimp and splurge
A common reno risk is over capitalisation – spending more on a renovation than the new changes will add in value.
Look at recent sales and current values of properties that will have a similar level of finish to what you are producing in a similar area. You need to actually research what the market value will be in the end, even if you’re not selling.
Renovators can save by buying items from wholesalers or seeking suppliers who offer discounts for limited quantities or end of run products. However, homeowners should invest in the features of a property that will remain for the longest, including appliances, cabinets and benchtops.
3. Set aside a contingency
Unexpected costs are an unavoidable part of the renovation process and should be planned for in the budget.
Hidden damage such as bad wiring, rotting wood and termites, only uncovered once a reno is under way can be a headache. Permit fees for things like adding a swimming pool, extra room or garage can be costly.
Similarly, understanding what tradespeople will invoice for before works commence avoids expensive surprises.
Make sure you thoroughly read the fine print in any builder’s contract so you’re aware of extra costs for things like tools and materials.
To prevent a renovation from grinding to a halt, set aside at least 10 per cent of the total budget to cover unexpected costs. It might mean putting off a renovation to save for a little bit longer, but creating your dream home without hiccups is worth the wait.
SOURCE - Domain.com.au