You may love watching television renovation shows; but in reality renos are hard work, expensive and not always appropriate. Here are eight tips to help you make smart renovation decisions.
- Determine why you are renovating
While there are many reasons for renovating, the most common tend to be:
- to improve your home long term, or
- to generate profit by selling a property on or leasing it out to tenants.
Carefully considering your reasons for renovating can help you determine your budget and your risk of overcapitalising.
- Consider your risk of overcapitalising
Overcapitalising is spending more on the property than will be realised by its potential increase in value. If you overcapitalise, achieving a good return on your investment is less likely when you decide to sell. To avoid this, try to get the opinion of a real estate agent on the likelihood of your planned improvements adding value to the property. Then, once you have reviewed quotes from reputable builders and tradies, create a renovation budget and stick to it.
- Seek architectural advice and council approval
Depending on the scale of the project, you may need the services of a qualified architect. You should also contact your council to check local regulations before you start. For example, you may need planning permission if you are changing the use of any rooms, planning a larger deck, or making structural changes. You might need to submit a Development Application (DA), which is likely to involve fees, a time frame for approval, and potentially a period of public notification. If your plans are likely to impact your neighbours due to noise, mess or potential parking difficulties when skip bins, construction machinery and/or tradies’ vehicles need to be at the property, be neighbourly and advise them well in advance.
- Decide how you will manage your living arrangements during the reno
Safety must be your primary concern for everyone on-site. Evaluate whether you will be able to live at the property during the renovation and, if so, how you will cope with the dust, noise and general disruption that’s part of a renovation project. If the property will be a construction zone, you might need to budget for alternative accommodation, or perhaps think about temporarily moving in with parents or friends. If your plans are likely to impact your neighbours due to noise, mess or potential parking difficulties when skip bins, construction machinery and/or tradies’ vehicles need to be at the property, be neighbourly and advise them well in advance.
- Evaluate your project management skills
If you have fantastic project management skills, you may decide to manage the builders and contractors yourself. Alternatively, you might prefer to hire someone to supervise the project. Whichever you decide, be sure to create a checklist and schedule so you have clear oversight of your project’s progress and budget.
- Calculate your budget and decide how you will fund your project
Renovation projects often cost much more than anticipated, so you should be prepared to save at least 20 percent more than your budget. Once the work starts, there may be nasty surprises such as previously concealed damp or termite damage that will need fixing. Decide how you will finance your project, perhaps using savings, refinancing, or releasing equity from your home via a redraw facility or reverse mortgage (if you are a retiree).
- Think about the schedule of work
Good contractors and tradies are always in demand, so it’s a good idea to plan the work as early as you can. Consider the impact of winter for roofing or outdoor work as inclement weather could cause delays. Think about the sequence of works, such as starting with the ceilings, then the walls and floors, and how best to utilise your tradies. Develop your schedule and checklist so you can monitor progress and factor in any delays, where possible, to help you manage your budget accordingly.
- Beware of limiting your property’s appeal
If you are planning to sell the property to realise profit, or intend to lease it to tenants, beware of unique design choices that could limit your property’s appeal. The real estate market can be very competitive, so you will want your property to stand out for the right reasons. Alternatively, you can enjoy unleashing your creativity if you are renovating your forever home, providing you remain within your budget.
Identifying the possible costs involved
You might find it useful to examine each room and list the work involved to help you estimate the costs. According to the Renovations Roundup report from Housing Industry Association (HIA), half of all renovations are valued between $40,000 and $200,000. Your location, choice of builder and materials will of course affect your costs, but don’t forget to add an additional 20 percent to your budget to cover unexpected costs.
We're ready to help you
At G&C Mutual Bank we have over 60 years’ experience in helping our members achieve their financial goals, and we have various options to help you finance your renovation project.
If you are interested in refinancing, you could unlock the equity in your current property to fund your renovation project. Alternatively, if you have an existing redraw facility with funds available, this could be utilised. Our free Home Loan Health Check can help you understand the options available. Our Mobile Lenders are available to meet you at a time and place that’s convenient for you. Alternatively, you can speak to our team over the phone.
A personal loan can help bring your renovation vision to life. Unlike many personal loans, the rate on our award-winning Fair Rate Personal Loan is guided by your credit worthiness so you may be rewarded with a better rate depending on your borrowing history.
Apply online or contact us to find out more.