| We all want to make a profit when we sell our home, | | | | If you want to increase the rent, the extra loan |
| so doing some renovations is the obvious solution, but | | | | repayments should be less than the cost of borrowing |
| you have to do it right or it could cost you money. | | | | to renovate. |
| One of the biggest problems is over capitalisation. In a | | | | If you want to use your increased equity then you |
| neighbouring street, which is quite pleasant but a | | | | must know that the money you spend on the |
| popular short cut there is a large home for sale. The | | | | renovation is much less that the increased value on |
| asking price is $1,600,000. In that street a top value | | | | the home. E.g. you spend $50,000 on a renovation then |
| home would sell for $850,000. | | | | a revaluation adds $100,000 to your home you could |
| It is a classic case of spending too much on the wrong | | | | use the extra $50,000 to invest in another property. |
| property. They may sell it, but for the same money, | | | | Be sure your expenses will be returned with a profit if |
| within a short distance there are lovely homes with | | | | you are selling the property. This means properly |
| nice vies in quiet streets. | | | | costing the renovation before you start. This is not as |
| That house is an extreme example but this is a | | | | easy as it seems. |
| common mistake. Spending too much to make the | | | | If you are getting a builder to quote on the job make |
| house perfect. Most buyers don't want perfection, they | | | | sure it is a fixed quote. Remember in many places that |
| want a good buy and they want to stamp their own | | | | if you make changes to the plans once building has |
| mark on the property. | | | | commenced then the contract quote is void. |
| Renovating a bathroom or kitchen can have a good | | | | Try to avoid changes, it gets the builder off side, it |
| return. If you want to make some structural changes | | | | adds to your costs, it takes longer to complete the job |
| then think of en suites and creating storage. Most | | | | and often the extras can completely blow out your |
| homes have insufficient storage for the huge amount | | | | budget. Don't forget that changes may also require |
| of stuff we all seem to have these days. | | | | removing work done and wasting materials. |
| The important thing is to remember why you are | | | | Research the market, don't over capitalise, avoid |
| renovating. If it's for yourself, then you do what you | | | | changes, and cost the job very carefully. |
| want as long as you can afford the extra repayments. | | | | |