Know your mar­ket


More of­ten than not, you have to spend money to make money. It’s an age-old adage, but one that still rings true for to­day’s prop­erty owner think­ing about ren­o­vat­ing a house or apart­ment with the hope of bag­ging top dol­lar at sale time.

But what and how much a ven­dor de­cides to do – and, more to the point, in­vest – de­pends on a host of com­pet­ing fac­tors, such as the type of prop­erty, the sub­urb in which it is lo­cated and the po­ten­tial buy­ers.

In some in­stances, such as with a clas­sic ‘‘ren­o­va­tor’s de­light’’, it can be bet­ter to do noth­ing at all.

The im­por­tant thing is to un­der­stand your mar­ket, says Belle Prop­erty prin­ci­pal Tim Foote.

‘‘You need to know the dif­fer­ence be­tween what a ren­o­vated place will sell for and what an unrenovated one will,’’ he says.

‘‘Some­times, an unrenovated place gets more, be­cause buy­ers are ex­cited about do­ing the work them­selves.’’

Shan­nan Whit­ney, of BresicWhit­ney, says ven­dors choos­ing to ren­o­vate must con­sider whether they un­der­take ex­ten­sive mod­i­fi­ca­tions or some­thing more cos­metic.

Ma­jor works usu­ally in­volve al­ter­ing the lay­out of the home: knock­ing down a wall to open up an area, sec­tion­ing a room off or adding an up­stairs bed­room – works that gen­er­ally cost $50,000 and be­yond.

Cos­metic re­pair cov­ers work such as re­vamp­ing bath­rooms and kitchens, both pop­u­lar with sell­ers.

It also in­cor­po­rates mi­nor jobs that agents typ­i­cally re­fer to as styling – from re­plac­ing floor cov­er­ings and up­dat­ing fur­nish­ings and fit­tings to paint­ing, re­fresh­ing the fa­cade and do­ing up the gar­den.

‘‘Any­thing that func­tion­ally or stylis­ti­cally dis­cour­ages a buyer needs look­ing at,’’ says Whit­ney, adding that apart­ments are eas­ier to do up than houses.

The trick is cal­cu­lat­ing what to spend on cap­i­tal im­prove­ment against the ex­pected re­turn.

Pa­trick Bright, a buy­ers agent and au­thor of The In­sider’s Guide to Ren­o­vat­ing for Profit, says: ‘‘About 40 per cent over­cap­i­talise, 40 per cent un­der­cap­i­talise and 20 per cent get it right.’’


Do-up: Cos­metic re­pair cov­ers work such as re­vamp­ing bath­rooms and kitchens, both pop­u­lar with sell­ers.

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