The renovation industry has been booming in Australia recently as families outgrow their home and need to add extra space, want to update or have a need to repair damaged parts of a building. However, while it can be very rewarding when complete, renovating your home is likely to be one of the most stressful projects you undertake. In order to streamline the process it’s important to conduct plenty of research so that you minimise potential headaches along the way. When looking at renovating your home there are several factors that you should consider before committing to the new project.
1. Counting the Costs
Before you start a renovation it’s always a good idea to weigh up the pros and cons of selling versus renovating. Although a renovation might seem like the cheapest option to begin with, because of the extra time and money often involved with demolition of buildings and reconstruction work, renovations can actually end up being more expensive than building from scratch. According to building design and inspection experts Archicentre, kitchen renovations will usually cost between $10,000 and $32,000 (depending on the fixtures and finishes chosen), while a bathroom upgrade will generally come in at between $10,000 and $25,000 depending on the quality of materials used. On the flipside, the costs of selling a home can easily exceed this amount especially once you’ve added up the fees from your real estate agent, solicitor and removalist, as well as the tax you will pay on stamp duty. If it’s a numbers game, often renovation wins over selling and when choosing whether or not to renovate it is wise to crunch some numbers beforehand to see which option is better for your circumstances.
2. Set a Budget
While some people have the cash set aside to pay for their renovation work, many homeowners borrow against the mortgage on the property in order to complete the project. If this is the case, it’s always sensible to speak to a broker, such as Mortgage Choice, about your best refinancing options.
Once you know how much cash you have to play with, do your best not to exceed this limit. Try negotiating for the best price on fixtures and fittings with a wholesalers rather than a showroom and research the cost of any potential unforseen expenses such as plumbing, damp proofing or rewiring.
3. Avoid Overcapitalising
One of the biggest problems that DIY renovators find themselves in is that they have overcapitalised on their renovation. Overcapitalising means that the cost of the renovation has exceeded the market value that the work will add to the home. If you were to go ahead and sell the property today, there is a good chance that you will make a loss on the home and not clear the costs of the renovation.
In order to avoid this scenario, ensure that you obtain a minimum of three quotes from qualified builders, architects and any other professionals that you need for the renovation. Don’t be afraid to haggle on their rates, and always make sure that any person or business you hire (particularly builders, architects and engineers) are licensed and insured for the work they will be performing. Also remember to have contracts for major renovations (exceeding $10,000) reviewed by a building solicitor before you sign on the dotted line.
In addition, arrange for at least three real estate agents to inspect and value your home before you begin any work. Give them an idea of the type of additions you want to make to the property and check to see if these will actually add the value you hope they will. They have an intimate knowledge on the potential value a renovation will add to the house and whether the market will find value in the renovation. Then you should set a budget on the renovation based on their assessments.
4. Obtain Council Approval
It’s also essential that whenever you plan renovations to your home that you check with your local Council to see if you need to submit any plans for approval before you go ahead. It is your responsibility to obtain any permits you may need for the work, so always double check before starting a renovation. Generally you’ll need to get approval from Council if you’re creating an extension, changing the external floor plan of the building, altering the facade or making structural changes to the buildings foundations. However each Council has different regulations so check to see what applies to your specific property.