Not all renovations will make you a tidy profit when you come to sell your property. Some projects will cost more than they will ever give you back. So what are the most lucrative projects to add value to your home and give you the best return come sales day?
Updating or replacing the kitchen is one of the top renovations for profit recommended by Dan Mulcahy, founder and managing director of Mulcahy’s Construction Group (MCG) in Melbourne, which specialises in pre and post auction renovations.
“Modular kitchens can be a cost effective and fast way to update the livability of a house or apartment,” says Mulcahy. “Although we suggest using a custom kitchen builder wherever possible as he will supply and install the cabinets as well as offer a warranty. Costs for a basic custom kitchen installed will all plumbing, electrical and tiling can be as little at $10,000. This can add enormous appeal and value to a property, with the increase in value sometimes being as much as $50 to $60,000.”
Builder Dean Harris who has been renovating homes for nearly 30 years in Sorrento, Victoria, agrees that well designed kitchens and bathrooms will bring a good return as “buyers don’t have to do any work, they can just move in”.
“The emotional connection between buyers and imagining living in the house they are buying is a big driver so when renovating it is vital to spend the money on the design of how the occupant will live in the area. For example kitchens are now a lot larger areas with bigger fridges and ovens for entertaining and more casual dining.”
However when setting aside a budget for renovating it has to be consistent for a good return. For example when renovating a kitchen it doesn’t work fitting a $9000 Smeg stove and having DIY cupboards. There needs to be consistency across the renovation. Be realistic and look at the big picture.
Update or add bathrooms. “The average number of bathrooms in new dwellings has been increasing over time and this is being reflected in the renovation market as well,” says says Greg Weller, spokesperson of the Housing Industry Association. “There are now on average 2.6 bathrooms per new home,” he says.
If you are going to renovate or add a bathroom it is important to have a clear budget set out from the beginning of the project and always work to a fixed price, advises Mulcahy. “Bathrooms are an area that buyers and tenants demand to be modern and up to date with clean and stylish fixtures and fittings,” he says. “As there are many components to a bathroom it is easy to over capitalise.”
“Renovations that help show off a home’s qualities rather than detract from it have the best chance of providing a good return,” says Weller. “Painting is always a great option to give a home a lift, with modern colours and shades.”
“Paint is the most powerful renovation tool,” agrees Bernadette Janson, director and head renovator at The School Of Renovating in Sydney. “You can instantly modernise and refresh a tired property with a coat of paint in a contemporary colour scheme. If you need help with the colour scheme Dulux has a colour consultancy service for less than $200.”
When renovating a home with resale in mind, improvements that add to the street appeal of a home are always beneficial, says Weller. “Maximising the number of potential buyers that are enticed through the door is the first step towards ensuring that the sale price meets your expectations. With this in mind, considering elements such as the garage or modernising cladding materials or colours are a good place to start.”
The front door is an important element in the street appeal, says Janson. “Replacing with a new modern door can add a lot of wow and costs approximately $500. Even painting the door with a rich oil-based paint will give it a big lift. Make sure the front garden is tidy, lawns mowed and beds weeded. If garden beds are bare, garden mulch is an easy way to spark them up. Repair and paint the front fence. Add a new house number and letterbox.”
“There is a definite trend towards upgrading outdoor areas to more indoor outdoor living,” says Harris. “An alfresco area in the past was a barbie on the patio where as now the outdoor area is an extra room, an all-weather extension of the house. The money spent on a well-designed all weather area brings its returns when the sale sign goes up. The outdoor area is an emotional driver for buyers. They see the area, imagine themselves using it and already they are sold on the lifestyle it offers.”
With any home renovation for profit Weller advises planning renovations with a broad audience in mind, rather than injecting too many personal tastes and preferences. “The last thing you want is for buyers to factor post-sale renovations into the equation.”
“The same goes for poorly done DIY renovations, particularly in the kitchen or bathroom, which can be off-putting for buyers,” he says. “Always consider using a professional so that potential buyers can picture themselves in the area for many years to come.”