Renovating to make a profit takes a different approach than renovating to live in. Keeping to a budget is vital, choosing neutral colours is recommended and doing a quick job helps. Keep the end goal in mind so you aren’t tempted to veer off track. It’s so easy to get caught up in the excitement of renovations and do more than you had planned to!
A general rule of thumb when you are renovating a property for profit is to spend no more than 10% of the value of the property. For example, if you purchased the property for $500,000 then the limit for your renovations should be $50,000. If you go over the 10% mark, you risk not getting a good return on your investment.
If the main aim for your renovation is to turn a profit, it makes sense to focus on the money generating areas. Here are some key places where you should start:
A kitchen is the heart of the home. It is a place where family gathers, meals are prepared, and guests can visit. But more than that, a kitchen can sell homes.
Having a clean, working and updated kitchen can add a lot of value to the price of your home. There are different levels you can take your kitchen to. High end appliances, good quality finishes and nice tile work can fetch top dollar. But if that is well out of your budget, simply changing the cabinet doors or updating benchtops can make a considerable difference.
Bathrooms are another area of the house that can add value to the sale price. People are looking for storage room in a bathroom, so be sure to include some in your plans. Even if you have a small bathroom, there are many clever ways you can include storage within the space that you have. With a small bathroom it is also good to think ‘big’. Using large tiles and extending the vanity mirror are ways to make a room appear larger than it is. Keep the colours light and of course, when it comes to open house day, make sure the bathroom is very clean.
The Front of Your Home
This is a space that is often overlooked and may not be top of mind when you are doing renovations, but it is an important place as it is where the first impressions are made. If you are doing up a stand-alone house, you need to look at the front fence, the pathway leading to the house, the front garden and the front patio and door. These areas won’t take much to fix up, in fact, most of the work here can be done by yourself for free. Just make sure the area is free from clutter and overgrown plants, and that there is no peeling paint or old dirty doormats. The first impression of a home really sets the mood for a person inspecting a property. If you are selling an apartment then there isn’t a lot you can do about the entrance to the building, but you can still make sure your door and hallway look neat, as well as the entrance inside the apartment. If there is anything that needs fixing on the building outside of your apartment, you should get in touch with the building management to work on repairs long before you are planning on putting your place up for sale.
Landscaping can add a considerable amount of value to your home. It will likely be in the range of 7-12% return, but some cases have seen even higher returns than that. If you have a lot of renovation work to do inside the house, it is likely that the budget will be taken up before you reach the landscaping. But it is worth keeping some money aside even for a quick cosmetic job on the yard seeing as it can add so much more to the final sale price.
An extra bedroom will increase the asking price for a home, and if you are in the lucky position of being able to add it in with a simple gyprock wall and light fitting change then it will be well worth your efforts. A home office is also a huge selling point, especially these days. It doesn’t take up a lot of space to add in a home office, but it can really increase the worth of your home.
A final note for anyone wanting to renovate a property for profit is to keep the buyer in mind. If you are selling in a funky, inner city area then you will be able to get away with choosing colours and finishes that are spot on with current trends. Areas further out in the suburbs that appeal to young families or older couples might be better with a neutral palette so the new owners can put their own taste on things. Either way, renovating for profit rather than to live in requires you to always be thinking about the buyer.