Property and renovations feature: Things to consider before renovating

Homeowners renovate for a range of reasons, but the aspects they need to consider are very similar.

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella says there are four key things to consider before renovating.

Overcapitalising happens when a renovation costs more than it 'makes back' in added value.

“It’s very easy to get carried away when it comes to making improvements to our own homes – particularly if this is your potential ‘forever home’ rather than an investment property,” Antonia explains.

“Either way, the right renovations can turn your house into a cash flow-positive property or simply help you better enjoy living in your home.

“Regardless of what kind of renovator you are, most of us would agree that it’s best to avoid spending money on our property (whether it’s the initial purchase, or spending money on improvements and renovations) that’s not able to be recouped down the track if and when we eventually sell.”

The timing of your renovation is another key factor.

“It’s important to consider things like the interest rate environment, the growth in the sales market (still moving in a northerly direction) and the cost of building and labour (still high but signs of stabilising),” Antonia says.

“Tradespeople are still in high demand and can be rare as hens’ teeth, meaning you’ll need to do your get your ducks lined up well in advance and consider having a contingency plan for materials or trades shortages.

“Consider what environment would mean that you’d be paying top dollar for your renovation, to determine if now is the right time for the type of renovation you want to undertake.”

Cost is a major consideration, so setting a budget is an essential starting point.

“The general rule of thumb that many still use, is that cosmetic renovations shouldn’t cost more than 10 per cent of the current market value of your home,” Antonia says.

“A good starting point is to seek advice from an REIQ-Accredited Agency. They can provide a current appraisal for your property as well as solid insights on where to concentrate your renovations.

“An agent can also provide information on median house prices and a comprehensive sales history for the locality of your property.

“Adding value to your home should be based on what the market is willing to pay, which is why doing your due diligence and understanding the market at the time and where it might be headed is critical.”  

Renovators also need to consider future potential buyers of the property to ensure improvements appeal to the type of buyer their neighbourhood typically attracts.

“This will help target the price point you want to achieve with your home renovation, the investment you need to make, and the buyer pool looking for what you’ll have to offer,” she says.