The biggest question to answer before you renovate your home | Making Cents
Renovating to add value is the dream, but overcapitalising is the nightmare that can turn your dream reno into a costly mistake. So, how do you tell the difference before you've spent a single dollar?
On this episode of Making Cents with Frances Cook, this question comes from a homeowner who badly needs more space and is weighing up an extension to their house.
Vanessa Williams, General Manager - Customer at realestate.co.nz, joins Frances Cook on Ask the Experts to pull back the curtain on what actually pays off when renovating.
In this episode, we’re talking:#
- How to choose between lifestyle and money factors when you renovate your home
- Why bedrooms and bathrooms are the big winner on value, but have a hidden downside
- The areas where people waste money on renovations, without realising it
In this episode of Ask the Experts, Vanessa Williams answers one homeowner’s biggest renovation questions.
Q: We need more space. Where do we begin?#
A great decision for you to get clear on before you're even renovating is: am I renovating to stay or am I renovating to sell?
I'm not saying you certainly shouldn't think about the selling down the track, if you are renovating to stay, because that's really important, too, but let’s make that delineation upfront and early before you even talk to any builders.
Q: What actually adds value to a property?#
The data consistently tells us... adding bedrooms and adding bathrooms are the two very crystal clear ways we can see that value will be added to the property.
Q: Is it possible to add too many bedrooms?#
We have seen this before… five bedrooms, and just about every room has been turned into a bedroom. There's one tiny little baby kitchen and some sort of weird offshoot of a living room. You think, 'where does everybody sit?' It's quite a bizarre configuration for a home, so going willy-nilly with bedrooms and bathrooms could mean you start to run into configuration issues. The more people you put into a house, the more room that they need.
Q: How far ahead should we be planning?#
If you’re thinking, 'this is a pretty good house for the next five, maybe ten-ish years’ time', think about what you’d like that lifestyle to look like in ten years’ time. Know how much space you need to be able to achieve that, then think about those crystal clear metrics that we know move the property market, which is number of bedrooms and number of bathrooms.
Q: How should I renovate if I’m planning to sell? #
"You would make different decisions if you were looking to renovate to sell. You would want to make the space as neutral as possible, where any buyer walking in could see themselves in your home. You do that with very basic neutrals, very clean living, perhaps mid-range tap-ware or appliances."
"If you are adding value to sell, you want to make sure that key pieces like bedrooms and bathrooms are really sturdy, but doing that in the most cost effective way possible."
Q: How should I renovate if I’m planning to stay?#
You might go, 'these are a little bit more of an expensive appliance', but we are going to be using them for ten years, so we don’t want to have to replace them after five years. It makes sense to invest a bit more now, knowing that you are utilising it, and knowing that it's an investment you are making for your self or your family. It's less of a financial decision and more of a lifestyle decision.
Q: What’s the biggest difference between renovating to stay and renovating to sell?#
"These are financial decisions for you to utilise the benefit of, which is very different than a financial decision to make the house look sharp, smart, and ready to sell. You would make two very different sets of decisions when you are thinking about those investments.”
Q: What renovations almost always add value?#
"Data tells us that, give or take, anywhere between $80 to 150,000 depending on the configuration of your house... If you're adding a bedroom, you're going to add that amount of value because you're opening up a whole new range of buyers that will see your house as valuable."
"The liveability of the house is really important as well. If you've got a separate toilet and two bathrooms, fantastic. However you choose to configure your lifestyle. It just gives you more options, and more options typically increases the value of what buyers perceive within your home."
Q: Should I get more than one quote before renovating?#
"Always get three, that is my number one rule for anything. Have a conversation with a couple of contractors and see how they structure things. Sometimes we can be a little bit shy, and I would say be transparent. You don't have to hide it from anyone."
"That's just making smart decisions for you, because they would make smart decisions. That's why they're in business, too. I do think that rule of three is a really handy one... do a little survey of the market, see what there is out there and the value you can get."
Q: What’s the one thing every homeowner should remember?#
“One thing to think about, am I doing this for financial reasons or am I doing it for my lifestyle? Check that this house still ticks as many boxes as it did the day that you bought it. If you're looking to stay, just fast forward five years and think, what will our family life look like then?"
“If we put that little forward lens over the decisions we make, it makes our lives that much easier in the long run.”
Listen to the full episode of Ask the Experts for more practical property advice from Vanessa Williams.
