It’s not the usual end-point most people imagine when considering renovating, but diminished profits can be the outcome, when a renovation is ill-considered. And even when it is well considered.
The bucket-list of what makes a reno-go-awry, in terms of profit is hefty, but on it are: not enough bathrooms for the number of bedrooms; a disjointed layout, for example the toilet coming off the living area (or the first thing you see from the entry as I once saw!); poor natural light in living areas; spending too much on a property not worthy, and on and on we could go…
When deciding to renovate, you must first be clear with yourself whether it’s to make a profit or for lifestyle or personal preference. The former is about a series of business decisions, but the later – such as adding another bedroom, a pool, or painting the kitchen pink needs to be done knowing that these may not add value as intended.
Yet if selling isn’t on your mind in the near future, then go ahead and paint the walls pink or black. Or whatever colour moves you. But be honest with yourself, knowing you are doing it for you and not for resale value.
Or, here’s a radical proposition. In today’s image-focussed, make-it-yourself in a ten minute time slot TV show obsessed culture, what if… what if you didn’t plan to renovate your well situated, solid, functional, family home?
Well, for a start you’d save money.
You’d save money that could be spent on paying off the mortgage sooner. An extra $25 a week on a $400,000 loan could save you more than $34,000 in interest payments and reduce your term by up to two years.
Finding that sweet-spot between spending money on a renovation and making a profit out of it is as much an art as it is a science. Unless the finished product meets market preferences, and has that certain something that makes it a ‘must-have’ home, then money spent today on renovating for future profits can be a calculated gamble.
Sometimes the best form of action is inaction. Have you considered the benefits of not renovating?
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Hicks Real Estate Team
Hicks Real Estate is a Brisbane based, full-service real estate agency supporting buyers and sell as well as renters and property investors. With almost 20 years experience in the local market, we are the real estate experts you can rely upon.
