Australians will spend $35 billion renovating their homes this year, with kitchens and bathrooms the most popular makeovers. But not all DIY additions are guaranteed to add value, and it’s important to carefully consider the pitfalls before tackling a project.
John McGrath, chief executive of McGrath Estate Agents said there are many dangers lurking inside your next renovation, so tread carefully.
“Many people grossly underestimate the cost of their renovations,” he told Money magazine. “Once you’re midway through a renovation it’s generally impossible to turn back.”
McGrath recommends getting detailed quotes from consultants before starting a project and factor in the cost of finishing touches, he said.
Research shows the average renovation is between $100,000 and $200,000, with many home owners dipping into equity to fund new additions. If you have a home loan and make extra repayments it may be possible to draw on these funds later when it comes time to renovate. Check that your mortgage offers a redraw facility as a feature of the loan, and make sure you do the sums!
Chris Gray, chief executive of property management and advisory company Your Empire, said higher costs of renovation and a soft real estate market can see gains massively eroded.
“Most people think that the more money they put into it, the more money they are going to make,” he told Today Tonight.
“The biggest trap for most people is it takes twice the amount of time, twice the amount of budget, and the quality is not very good, and they think it’s as easy as the TV shows say and as easy as the magazines – and it’s not.”
Another costly mistake made by home renovators is failing to get council approval before making structural additions to a home, research shows. Not only is this illegal, but building without approval can be unsafe.
“We see disaster stories, and they usually revolve around people not having a good understanding of the project ahead of them,” said David Hallett from Archicentre.
“We inspect a lot of homes for home buyers, and we find illegal building work of some sort or another in 25 to 30 percent of the homes we inspect,” he told Today Tonight.
You can turn your home into a money-making machine by buying and renovating. Whether grooming for sale or just improving the place for you to live in, there are simple ways to inject real value into your home.
McGrath recommends focusing renovations on areas and rooms that generally add the most value, including the living spaces, kitchen areas and bathrooms.
“If you get these right you can invest $100,000 and double the value in weeks. Get it wrong and you can end up losing money on the process,” he said.