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.