Are you feeling inspired to take a run-down wreck and make it new again?
It all appears to be so simple and gorgeous, with random 'beautiful people' slipping their neatly combed hair into bizarrely appealing hardhats.
However, the reality of a large-scale rehabilitation project differs greatly from 'TV reality.'
Renovating your home is a massive undertaking that demands a great deal of attention to detail. However, if you set yourself up appropriately and have a clear plan in mind, you may avoid some of the headaches.
Whether you're considering a fast DIY bathroom renovation or inviting an army of tradies into your home, here are the top things to consider before you renovate.
Decide what you want the makeover to accomplish
Are you remodelling with the intention of selling, or do you have more long-term ambitions in mind? It is essential to comprehend the reasons behind your desire to do renovations in the first place. If you're doing some remodelling to keep from having to move in the near future, the work you do now should be sufficient for the time being. Think about how many bedrooms, bathrooms, and square footage of living space you'll need in the future, especially if you have a family that is planning to expand.
Improving your own home to make it more livable for your family will likely necessitate a totally different approach than repairing a rental property.
In the first scenario, convenience is prioritised over both financial considerations and personal concessions.
It goes without saying that you should avoid over-capitalizing, but it is not nearly as critical to have a substantial financial cushion between the money you spend and the money you have the potential to produce.
However, if you want to increase the amount of money you make from renting out your property and build equity in your home, you will need to put a priority on financial considerations.
Instead of relying on feelings, the strategy should be grounded on unambiguous facts and sound reasoning.
Decide what you want your kitchen remodel to accomplish before you start looking at different kitchen showrooms. Make sure that your decisions are guided by the bigger picture.
Homeowners who intend to remain in one location for a significant amount of time should give some thought to the possibility of using more luxurious building materials in order to make their lives more pleasant.
Those who are interested in a speedy sale of their home should make every effort to attract the attention of the largest possible pool of prospective buyers without going bankrupt in the process.
Even if you have no immediate plans to sell your home, it is still a good idea to give some thought to the ways in which a renovation could raise the value of your property. Renovating your kitchen should account for roughly ten percent of the value of your home, while renovating your bathroom should account for approximately five percent of the worth of your home. This is a good rule of thumb.
Benchtops and splashbacks made of Caesarstone or concrete are popular options among purchasers due to the great quality of both materials as well as the neutral tones of the materials. The appearance of a higher-end price tag is conveyed by kitchens that feature lighting that is fitted underneath the cabinetry. The installation of high-end or mid-range appliances, particularly those made of stainless steel, has the potential to raise the value of a property. Customers place a high value on the availability of storage space.
Increasing the quality of the materials used in the construction of your home will increase its lifespan, which will, in turn, reduce the amount of money you will spend on repairs and maintenance over time. Think about the effects on the environment, as well as the capabilities of the structure, the thermal performance, the acoustic insulation, and the resistance to fire, pests, and moisture. Also consider the capabilities of the construction. The lightweight framed construction that makes use of both steel and timber is the form of building that is utilised the most frequently in the construction industry in Australia. A home's ability to conserve energy can be improved by using this particular kind of construction. Many people save items from the house they lived in before moving into their current home, even though they have since relocated into a new residence.
Do you possess the necessary knowledge?
Perhaps you've given your own home a facelift and now feel confident enough to tackle a project with an eye towards making a profit.
However, one DIY project does not make an expert.
If it were so easy to make a profit from renovations, then why do so many individuals walk away with nothing at the end of a trying and upsetting experience?
To get started, you need to find out whether the jobs you want to do require permission from the local government authority and how to apply for those permissions. If they do, then you need to find out the jobs you want to do.
Then there's the due diligence, which involves conducting an analysis of the profitability of the project, as well as risk assessment and mitigation, risk management and mitigation planning, time and cost management and mitigation planning, tradesperson coordination, and working through various building procedures.
It is in your best interest to contract the supervision of your renovations to an experienced contractor or project manager.
If you are the type of person who enjoys getting their hands filthy, I would suggest that you hire a fully skilled specialist for the first few small-scale developments so that they can provide you with the much-needed "on-the-job" advise before you go it alone.
Examine your spending plan honestly
Be truthful with yourself regarding how much money you have available. Get written estimates from at least three different builders, and make sure you understand exactly what these do and do not include in the estimates. It is reasonable to anticipate that you will be responsible for paying between 45 and 50 percent of the cost of goods, between 30 and 35 percent of the cost of labour, and between 20 and 25 percent of the cost of fees, taxes, GST, and levies. Keep in mind that there may be additional costs, such as those associated with storage or authorisation from the local government.
It is essential to have a clear understanding of if you are taking on more than you are capable of chewing. And whether or not it is beneficial to chew even more vigorously.
Before you make any significant choices, it is important to get a cost estimate from a builder or quantity surveyor.
Investigate the many financing alternatives available so that you can get the most bang for your buck out of the makeover. In addition, you shouldn't undervalue the stress that having a high mortgage can put on your family life, particularly if you have young children.
If you do not have enough money, you should talk to your bank or a financial counsellor about obtaining a construction loan, extending the term of your current house loan, or refinancing your mortgage. You can also get a copy of Archicentre Australia's Material Cost Guide by contacting the organisation.
In spite of the fact that you have hired a project manager, you are still responsible for monitoring the budget and meeting the due dates. Maintain a safe and orderly location for your bills, receipts, contracts, and plans, and make notations on your calendar on the project deadlines that you are required to meet.
If you are in charge of the project, it is important that you keep a daily journal of what is occuring on the premises. This ensures that the renovation stays on schedule and provides you with concrete dates to refer to in the event that issues arise with the personnel or the delivery.
During a renovation, unexpected delays, hidden costs, and substandard work can all occur. Create a 15-20% buffer in your budget to handle unforeseen expenses. Speak with your home and possessions insurance before beginning work. Many policies exclude water damage during renovations, and some will cancel coverage if your home is not sufficiently secured. Inquire with your builder whether their insurance covers the entire structure or just the part they're working on. If you have a problem with a contractor, write down your concerns and explain how you want the problem resolved.
Getting the necessary funding
This should be at the top of the list since, obviously, if you can't get the finance you need to buy and then improve the house you desire, everything else is meaningless. If you can't get the financing you need, this should come before anything else.
You should be able to utilise the existing equity in a property investment that you've had in your portfolio for a few whiles before deciding to carry out upgrades. This will allow you to avoid having to dig into your own pockets for the money.
In order to accomplish this goal, I like to invest in properties that can be occupied in their current state but, with some minor cosmetic updates made as and when time and money permit, will produce a better rental income and attract more capital growth.
Just keep in mind that if you want your project to succeed on a wider scale and you need to seek additional financing from your lender, you may need to restructure your debt in order to make the numbers add up.
What is your driving force?
If you want to increase the value of your home, consult with a local real estate professional. Inquire about the types of characteristics that are desired in the region and what you may do to improve your home. If you're giving an ancient house a new lease of life, keep in mind that it may conceal severe structural flaws. Set aside a chunk of your budget for any surprises that may arise.
Consult the professionals
If you're considering a do-it-yourself remodel, check with your local council to learn about any applicable restrictions.
It is critical for larger jobs to ensure that your home can sustain the task you have in mind. This is something that experienced builders and skilled building inspectors can advise you on.
If you hire a builder, they should be able to guide you through the council process of obtaining planning and building approvals. Check their references and look at examples of their work.
Don't make assumptions about the approvals you'll need. Contact your local council, state planning body, or a specialist town planner to find out for sure.
Architects can save you time and money if you need assistance with the design of your home or are dealing with difficult construction. Their fees should account for about 10% of your budget.
If this is not the case, you can have your designs drawn up by a draftsperson or a building designer, but make sure the drawings conform to building and planning requirements. Check the credentials of anyone you hire with the state architecture board or the local building authority. Many builders will also project-manage work, so when getting quotations, ask if this service is included or if you'll have to handle it yourself or employ a separate project manager.
An interior designer will ensure that your home appears perfect, but it can be expensive. If you're on a tight budget and prepared to scour the stores (and the internet) for the items you need, an interior designer may not be necessary for your remodel.
Architects are typically project managers. If you are not going to handle the project yourself, you can hire a qualified project manager.
What about Tradespeople?
What makes a good tradesperson?
You must answer this question before beginning your search for on-site professionals in the Yellow Pages.
The first thing that springs to mind is quality workmanship at a fair price, but availability and dependability are also crucial.
You can find good personnel for your project team in a variety of ways, including:
- Referrals from friends or coworkers
- Inquire at your local hardware store; they frequently have ongoing relationships with tradesmen and will know who is more reliable.
- Stop by adjacent workplaces and request business cards;
- You'll most likely be working closely with the many tradespeople you hire, so make sure you can maintain a positive connection and effective communication with them.
Who will be living there?
The number of adults and children who will reside on the property, as well as the length of time you intend to stay, influence the number of bedrooms and bathrooms required. If you're thinking about adding two or more bedrooms, examine whether you'll be overcapitalizing. Some experts suggest that you should not spend more than 10% of your home's value on renovations, but if you intend to remain in the property for ten years or longer, this may entail overcapitalizing in the short term.
How do you find 'the one?
I'm talking about the property that presents with ideal development potential to realize a beneficial return.
To identify a renovator's delight,' you must first assess the type of profit it could provide.
Ideally, you should try to add $2 to the worth of your home for every $1 spent on cosmetic upgrades.
You don't want to overcapitalize by paying too much for the house before you even start working on the renovations, so it's vital to research the area and understand comparative values.
It is advisable to consult local real estate professionals to learn what buyers and tenants anticipate from the property in the region in order to decide if the investment you are considering will yield a profit.
What time do you have left?
If you work more than 50 hours per week, like many people in Australia do, is it realistic to expect that you will be able to do a major renovation project on your own?
Someone needs to be on-site to monitor the procedures and make sure that everything goes as well as it possibly can so that the renovation can be finished on time and without going over the allotted price.
Employ a seasoned project manager if you are unable to commit the required number of hours and days to managing the project.
Even while their fees could potentially add another ten percent or so to your overall restoration costs, there is a good chance that it will be an investment that is profitable.
Remember, the longer it takes to finish your asset's renovations, the longer it will take to generate that all-important income flow from your rental property.
In addition, opportunities are frequently lost because of a failure to plan and execute the necessary transactions at the appropriate times and to work in accordance with a strategy that has been carefully considered.
To put it another way, if you let one project drag on for an extended amount of time, you run the risk of missing out on other possibilities to expand your portfolio more quickly.
Get the timing right
Delays may be both aggravating and costly. That is why it is important to consider the timing when renovating your property.
Ideally, your new flooring should not be fitted before the cabinetry. Or have your Caesarstone bench installed before the new ceiling is installed.
Also, consider whether you need to relocate while the work is being done, especially if the restroom will be out of commission for an extended period of time.
Before you begin, visualize all of the parts of a room.
If you're going to spend a lot of money on a remodel, you want it to look great.
That requires selecting how you want each room to look from the start. An interior designer or decorator can assist you. They will guide you through a process that will allow you to discover your personal style and bring it to life.
This includes sticking to a budget and creating the desired design through sketches, mood boards, and samples.
If you're going it alone, look for ideas in publications, books, and blogs. Create a Pinterest file or board to save your favourite photographs. Look for reoccurring patterns in your choices. Choose one or two important components and base your design decisions on these.
What are you going to do with the end product?
Some real estate investors appear to have made a decent income by becoming professional project managers and pursuing a buy, renovate, and sell approach.
But I frequently wonder how much long-term wealth their investment could have generated if they had kept it as a high-growth rental.
For my money, the buy, refurbish, and hold strategy makes a lot more sense because it allows you to use any extra equity generated by all of your hard work to invest in other high-growth assets and further expand your nest egg.
Whatever technique you choose when considering a renovation project, must be consistent with and complementary to your overall investment goals.
Onwards and upwards!