The ideal time to renovate or downsize your home

The ideal time to renovate or downsize your home

I’ve had two very similar conversations recently about residential renovations. One with my sister and one with a prospective client, let’s call her Mary. Mary lives in Northcote in a period home that needs a complete renovation. We had a good chat which included a discussion about when to renovation and when to downsize.

Budget is a key factor when considering a renovation project. For my sister and Mary, the cost factor has many implications. My sister’s renovation project is about $150,000 on a property valued about $800,000.

Whereas Mary’s renovation project could be anywhere between $300,000-$500,000 on a property valued at $1.2 million. The work includes a new roof, restumping, new kitchen, new bathroom, new floor, painting internal and external, storm water draining repair, new heating system etc etc.

The key difference between my sister and my prospective client is their life stage. My sister has a young family. However, Mary is an empty nester in her sixties. Your life stage as well as budget impacts when to renovation and when to downsize. Here are the key factors I discussed with Mary to help her make decision.


With Mary we talked about how most professionals in the property industry will tell you not to overcapitalise on your residential renovations.

This means not spending more than 10% of the current value of your home. For Mary, the current value of her home is $1.2million. So her budget to renovate should sit at around $120,000-$150,000 (including some money for contingencies). But this budget will not cover the work needed on her house which we estimated to be approximately $300,000.

So, it meant a re-think for Mary in terms of her budget, and her current life situation. As an empty nester would it be better, cheaper for Mary to downsize. Downsizing presents interesting opportunities as it can mean moving into a property that requires less maintenance and therefore less stress.

I told Mary about another client who recently downsized into an apartment in Collingwood and how excited she was about this new stage in her life. She told me she took a ‘pre-emptive strike’ which I thought was a smart way to approach downsizing.

What this means is that she made a decision to move when she was well in her health. Rather in than waiting for a significant life event to force her to make that decision.

Also, although I don’t know Mary’s financial situation, we did talk about the value of spending so much money on a family home while she’s in her early 60s. Would that money be better spent on her retirement fund?

Personal situation

As mentioned above there are many personal reasons that impact the decisions whether to renovate or to downsize.

For Mary, it was that she lived alone in a three bedroom house and was not necessarily close to her daughter. She hoped to her, in the future, if her daughter had a child that Mary would spend time with her grand daughter so she may need the other rooms in her house for that situation.

So I asked Mary if a two bedroom property for this situation, IF, it arose would suffice and she said yes.

Mary also acknowledged that she had a low propensity for stress. I was honest with her when I said that all renovation projects even if you’re working with an interior designer and have the best builder are stressful.

Additionally, Mary has limited mobility which will get worse as time goes by. We also talked about Mary’s artistic painting, her social life and in general, from a functional perspective how she uses the house.

We talked about the opportunity of painting from a shared studio space, which would enable Mary to connect with other creatives. She thought this was an interesting and exciting idea, compared to painting alone in her home.

Therefore, when being honest with her current life situation, Mary started to realise that downsizing might be an option she wanted to explore.

Stress levels when downsizing

For some people renovating equates to stress. Something always goes wrong and it’s usually expensive. In a project like Mary’s, it also means leaving her home for an extending period. For some people that can lead to feeling displaced.

Simply by not being at home and watching your home in various stages of a renovation can be an emotional journey for some people.

Knowing your propensity for stress can be an important factor when deciding to renovate or to downsize.

Research your downsizing options

I suggested to Mary that she’s in the early stages of her decision-making process. I advised that she speak to a buyer’s advocate to see if they could help find the perfect property to downsize to.

For Mary, it also makes sense to speak to a financial adviser about the economic impact of spending nearly $300,000 on a renovation at this stage in her life.

Another good person to talk to would be real estate agent to get a proper evaluation on her home. To understand what her true budget is to undertake renovation work.

Also conducting her own research into the existing real estate market in the area she loves would be helpful to see what type of property she could downsize to.

The heart of interior design is functionality. For Mary, the kitchen and the bathroom are not functional.  She doesn’t use two bedrooms because there is insufficient heating. The attic is inaccessible for her.

So, if the functionality of your home is comprised and there are rooms you don’t even use, then I think this is a key factor when deciding to renovate or to downsize. Downsizing is also stressful but possibly not as stressful as undertaking a long and expensive renovation project on a home with rooms you don’t even use.

Mary has a long way to go before she makes a final informed decision. But it’s smart for her to take the time she needs to make this life changing decision of when to renovate and when to downsize.

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