You've decided you want a bigger, better and more desirable house. How do you determine when to renovate, what to do and importantly, how much will it cost and will we get our money back?
Unless you're in the building industry, most people are fairly naïve when it comes to making decisions about renovating. Poor choices can be costly, especially if you over-capitalise and spend too much money on the house of your dreams.
Michael Hoad of the Subiaco offices of real estate agents Paxton Hoad says many people make the mistake of not planning and fully costing their renovations.
"Any form of construction costs more than you think when you start and many people don't understand or underestimate what it costs to renovate."
"They make a lot of mistakes, often costly ones, such as why did I do that, I wish I made that smaller or bigger," he said.
Hoad also believes renovations date and what looked wonderful and up to date in 1985 may now look totally out of place.
"Everything has a life span and people really need to work out how long they're going to be in the house and the purpose for the renovations."
To avoid overcapitalising he recommends potential renovators look at the suburb and get a feel for what property is worth in the area before committing.
He gives the example of Subiaco, where land is tight, "if you've got a spot, in a half reasonable location, you'll get your money back and more."
He gives the example of owners in the suburb spending between $250,000 and $350,00 on renovations.
"The greatest increment is in the value of the land, houses generally depreciate offsetting increasing construction costs."
He also gives the example of a house valued at $400,000, where the transaction costs of moving cost more than $26,000 once agents fees and stamp duty are taken into account.
"Renovating is rewarding, it appeals to some people. Some people love it and others are not so creative," Hoad said.
Fremantle based architect, Philip Nikulinsky says many renovators get emotionally attached to a house and this is where they either overcapitalise or compromise the design of the renovation.
"A lot of people spend too much on the finishes and go overboard, that's when it becomes expensive."
"You've got to look at the end product. Every time you do something a bit different you're going to have to pay for it,' he said.
He says any significant renovation starts at around $120,000 and for older character style renovations owners should budget around $1,200 per square metre.
Nikulinsky's advice, "be rational about it, have nice finishes but don't go overboard."
This is a view backed up by builder Gary Matson of Subiaco Homes. He says it's often cheaper to demolish a house and start again.
"For 30s, 40s and 50s houses there's not a lot to retain, so you're spending a lot of money to achieve fairly little," he said.
In older areas he says its worth keeping the character, but again emphasises the importance of doing a budget and looking at ways of how money can be saved to avoid blowing out the budget.
Here are 8 tips for first time renovators.
1. Have your house valued. Get an independent view on how much your asset is worth. This will provide a benchmark on how much to spend.
2. Gather information about your area. Talk to real estate agents about how much properties in your area or street have been selling for. Get a feel for the market.
3. Work out what you want? What style of renovation do you want? In period or ultra-contemporary? What will you use the renovations for? What type of look do you want? This will determine the finishes and impact on your budget.
4. Plan your budget before you start. Work out how much you want to spend, how you will finance your renovations and what you expect to get for your money. Do you want to spend $6,000 on a kitchen or $26,000?
5. Do your sums and compare the costs of renovating versus selling.
6. Take a long hard look at the positives and negatives of each option in a logical and rational way.
7. Avoid becoming emotionally attached to your property or a design. Often this can cloud your views, costing too much money for your budget or impacting on the overall effect of the renovation. Take a rational approach to the decision of selling and moving versus renovating, or demolishing versus renovating.
8. Seek professional help. Get a range of quotes from builders, architects and those in the industry.
Thomas Murrell MBA CSP is an international business speaker, consultant and award-winning broadcaster. Media Motivators is his regular electronic magazine read by 7,000 professionals in 15 different countries.
You can subscribe by visiting http://www.8mmedia.com. Thomas can be contacted directly at +6189388 6888 and is available to speak to your conference, seminar or event. Visit Tom's blog at http://www.8mmedia.blogspot.com.
Chapter 7The potential chapter 7 debtor should understand that a... Read More
For most of us the process of getting out of... Read More
Are you a check fanatic? Don't worry, you aren't alone.... Read More
When you received an energy (heating) bill last winter, were... Read More
Well, dang! From what I've heard and read, it looks... Read More
Have you ever stopped to think about how your "mood"... Read More
Creating a budget can be a very difficult task. Although... Read More
Did you know that 43% of all married couples argue... Read More
You've analyzed your past expenses, put them into spreadsheets, loaded... Read More
With the advent of the internet and especially auction services... Read More
Whatever your reason for having a tight budget, the truth... Read More
Address labels are many things to many different people. If... Read More
It doesn't take much for you to get behind on... Read More
If you're like most people, your personal financial records are... Read More
The judge had to ask the question, and we had... Read More
As a parent you are bound to face a few... Read More
Has anyone been to the gas pumps lately? Soon $3... Read More
Doesn't it seem like the only impressive numbers we've seen... Read More
If you want money you need to learn how to... Read More
Commonly referred to as the first of the three major... Read More
Now that we are in the month of June I... Read More
Can you really afford a house? If so, how much... Read More
Would you be interested in freeing up 10% to 15%... Read More
Saving money is not easy and is made more difficult... Read More
The British government at the beginning of this year officially... Read More
Shopping for groceries is an inevitable fact of our ever... Read More
If you, like most people, have not seriously considered what... Read More
The Prudential has dubbed those who refuse to leave home... Read More
Each of us knows how to spend money, but do... Read More
I have to admit, I do it too. I complain.... Read More
In this age of information, keeping track of your finances... Read More
Finding a stable and secure income that will come year... Read More
Today I passed a thermometer at a bank that read... Read More
When people speak about the increasing age expectancies, they generally... Read More
Saving money is not easy and is made more difficult... Read More
There have been an estimated 9.9 million victims on America... Read More
The cries are heard from the distance, "I need help... Read More
I've been sharing the following idea with people for a... Read More
If you were to ask 100 women "What would you... Read More
Good money management needn't be difficult. In fact, there a... Read More
Do you have a 401(k) retirement account? Are you vested... Read More
Are you interested in saving money off your grocery bills?... Read More
Many don't realize that our basic utility bills provide the... Read More
Address labels are many things to many different people. If... Read More
Did you have a piggy bank when you were a... Read More
Women have a love/hate relationship with money. Most of us... Read More
We have heard a lot about consumers' personal information getting... Read More
During the last twenty years, banks have offered a number... Read More
To save on food, be an opportunist. Buy what you... Read More
If you're like most people, your personal financial records are... Read More
If You Have an Existing Account and 5 Minutes, You... Read More
Now that we are in the month of June I... Read More
There is a new bill that is being passes, it... Read More
Those who keep a watchful eye on where their money... Read More
The judge had to ask the question, and we had... Read More
Predatory lending exists in the mortgage industry. It's typically when... Read More
Sticking to a budget can be difficult, but with so... Read More
We live in a crazy world. Someone ought to sell... Read More
Shopping for groceries is an inevitable fact of our ever... Read More
The gas that we fill our tanks with every week... Read More
People haven't always written checks to buy goods and services.... Read More
If you, like most people, have not seriously considered what... Read More
In this age of information, keeping track of your finances... Read More
Vacations Made Easy: Buying a Florida Investment PropertyA relaxing beach... Read More
As a parent you are bound to face a few... Read More
Have you seen the recent article on a new "green"... Read More
Personal Finance |