This week I spoke to a prospective client in Frankston. They want to renovate or refurbish their home. This includes the usual updates such as kitchen and bathroom. But they were also talking about ‘opening up the house’ by knocking down some walls. So we talked about not over capitalising on home renovations.
While we were talking on the phone I asked them about their goals, and the key functional problems they want to address. I also asked if this was their forever home.
Australians have a love affair with property and renovating. For most of us our homes are our largest asset. So while looking at the floor plan of their house on realestate.com.au I made some initial suggestions of how they could improve the floor plan but I also suggested that they don’t over capitalise.
I think this term is probably well understood but I think what is not well understood is the actual cost of renovating. Recently my preferred builder provided a provisional estimate to two of my clients to refurbish their bathroom.
By refurbish I mean update the look, no change in layout. He said approximately $20,000 to both clients. What does this mean for my prospective client in Frankston in terms of their budget and over capitalising?
Budgeting for your home renovation
The house in Frankston was bought for nearly $700,000. Bearing in mind the percentage in which your property may increase in value over time, it’s common to hear that 10% of the value of your property is what you should spend on your renovation.
So for the prospective client in Frankston that’s $70,000. They have two bathrooms they want to update. Therefore already just on their bathrooms they can allocate $40,000 of their $70,000 budget.
They also want to update the kitchen and get rid of at least one wall. Can they do this with the remaining $30,000? Bearing in mind the cost of engaging a draftsperson and interior designer.
Making sensible decisions and being comfortable with compromises is key to renovating. Also by working with an expert like an interior designer they can improve the value of your property in terms of layout, flow of movement and overall look and feel. An expert can also advise you on where spend on what to save on when it comes to furniture, furnishing, fittings and fixtures.
This advice will go along way to ensure over capitalising on home renovations doesn’t become an issue for you. While you address functional problems and create a beautiful home for you to enjoy.