It’s been more than 25 years since Tom Hanks and Shelley Long showed us the calamitous side of renovating gone wrong in the comedy movie, The Money Pit, but the warnings ring loud and clear today.
With a sluggish property market, many homeowners are opting to renovate rather than relocate. Before you hit the hardware store and strap on the tool belt, here are my top tips to renovate your way to reward, instead of ruin.
1. Renovate or rejuvenate?
You don’t have to tear down walls or add a new storey to add value to your home. If you need extra space, you will probably have to renovate.
But there are plenty of ways to add value without making drastic structural changes: paint a new colour scheme inside and out; clean up and replant an overgrown garden; replace floor coverings or sand and revarnish existing timber floors; spruce up old windows with some modern shutters; or create some extra storage with built-in wardrobes.
2. Know what you can and can’t do yourself.
Not the DIY type? Face defeat early and call in experts to tackle the job. It may be difficult to part with money for something you feel you can do yourself, but if you botch the job, you will pay more in the long run. There are some jobs even skilled DIYers should not tackle for safety reasons, including electrical work, asbestos removal, and roofing.
3. Target your market.
If you are buying a property specifically to renovate for profit or tarting up your existing home for sale, consider the likely buyers for the neighbourhood. Remember you’re not renovating for your own lifestyle and tastes, so keep colour palettes neutral and avoid fittings that are overly artistic or unusual.
4. Take a peek at the competition.
Visit some of the fully renovated houses in your area that are up for sale to see what the market is prepared to pay and what buyers are looking for. It will give you a good handle on which features help differentiate one property over another and current values.
5. Don’t overcapitalise.
It remains the golden rule of renovating and is particularly poignant in the current market. Cost every aspect of your project and be realistic about the value it will add, especially if you are planning on staying in the property for only a couple of years or less.
If you plan on living there for more than five years, you have a little more leeway to recoup the value of your renovation at sale time.
However, it’s still wise to keep at least a 20% margin between what you spend and the current value in case you have to sell sooner than expected.
6. Don’t start what you can’t finish.
If you don’t have the money to undertake your project, don’t start. Some renovators kick off their project with an aim to saving up along the way. If your savings fall short you may be left with an unsightly, unfinished project, which will curtail your capacity to sell if needed.
Chances are you will also lose interest in taking on future projects, so make sure you have all the money you need upfront.