The experts in home renovations will often tell you that renovating can be a great investment. However, if not planned currently, spending on the wrong renovation projects can find you in a worse financial position than before the project begun. In this blog, we’re explaining how to plan a profitable renovation project, and why an S94 quantity surveyor in Sydney is crucial to the success of your plans.
What exactly is over-capitalising?
Over-capitalising is the term used to describe a renovation project that has not increased the value of a home (or another project) by more than what was outlaid. If you were to sell the home immediately after the renovation or improvement, for example, you would lose money compared to if you had not undertaken the project.
To move out or renovate?
How long do you intend to live in the home for? It is more important to take note of renovation expenses and costs if you intend to sell straight away or in the very near future. A project that is enjoyed over time is more likely to increase in value and thus gain back the outlay pre-sale (plus, you’ll also get the bonus of enjoying the renovation beforehand!).
Typically, a homeowner will renovate because they enjoy the locality of their place of residence – as opposed to relocating, which is attached to a string of additional costs, as well as potentially long waiting times.
If it is space or styling that is playing on you, a good renovation could alleviate some of the pain instead of packing up and shipping out. Therefore, before you make a decision on moving out or renovating, you need to weigh up all the pros and cons and set a realistic renovation budget for all the projects you want done before making up your mind.
Is it worth renovating?
The first thing you need to know is that not all improvements will increase the resale value of a home. Although renovations and improvements can be about making a home more liveable or likeable, if your primary reason for renovating is to boost the resale value, you need to understand which home improvements will help you achieve that goal. At the end of the day, you want to increase the value by more than the cost of work – not the other way around.
Pay attention to locality
Before outlaying any money on a renovation, you must always research the local market. Educate yourself on the average and top prices of similar homes in the area. Make sure you have a grasp on prices pre-renovation and what your home may be worth after the work is complete. This will provide an indication of what people are really prepared to pay, regardless of how proud you are of the finished project. For complete peace of mind, you may also want to consider arranging a professional valuation of your home, or employ the help of an S94 quantity surveyor in Sydney to give you an idea of how much the renovation will cost.
Stick to a budget
Once one of our quantity surveyors in Sydney gives you a cost estimate, you’ll be able to plan a realistic renovation budget. Know your maximum amount to spend based on local comparisons and stay within that range.
Know your future demographic
If you are renovating for resale, it is vital to consider the demographics of your future homebuyer. Who are you selling to and what features of the home are most important to them? Is your local area more attractive to singles, couples or families? What impact will your planned renovations make on their wants and needs?
If you are not sure, consider having a chat to a local real estate agent to gauge what buyers in your local market are seeking. Don’t throw away money on renovations that are unattractive to your market and demographics.
Avoid over-capitalising with a quantity surveyor in Sydney
A successful renovation comes down to clever planning and thorough research, well before any tool is picked up.
For help with your renovation project from concept to completion, just get in touch with a Section94 quantity surveyor in Sydney. We offer plenty of information and quality estimating services for residential projects and renovations, such as quantity surveyor reports, council approval applications and estimator insights for any construction or renovation project.
Want to know more about how to plan a renovation budget? Get in touch with one of our quantity surveyors in Sydney on 0413 953 869 today.