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Why Renovations are an Investment not an Expense
by Elliot Dean Health Guru and Web SpecialistIt's amazing how many people put off doing renovations because they consider it to be too costly. While there's no doubting that making improvements to your home requires spending money, it should not be looked at as an expense. By changing your perspective when it comes to renovations, it becomes easy to see that "investing" money into your house is a smart move.
Unlike lots of other purchases which lose value over time, renovations actually add value.
When you put money into improving your house, it will increase the value of your home. Generally speaking, if you invest $1 in renovations, you can expect at least $2 return. That's a great investment no matter where you are in the world!
The value of renovating homes is a big reason for the rise of "flippers". These are people who buy homes that need a lot of work, make the necessary improvements, and then sell the house for a lot more money. If you buy a house for $500,000 and spend $80,000 on renovations, you can expect to sell the property for $660,000. Essentially doubling the money you spent!
Obviously this is not without risks. Helen from Peter White Constructions specialises in kitchen and bathroom renovations in Melbourne.
"Renovating a property for the sole purpose of profits should be undertaken with plenty of caution", she said.
"If the property is on the low end of the market, there is a risk of overcapitalising. Spending too much on the renovation can result in losses, so do your research and get a good idea of the market price you can expect after improvements have been made".
Buying a new house in a hot market can be tough financially, but also means you need to move location which is another project in itself! A removalist can help transporting your belongings from one home to the next but you still need to sort through everything and itemise and package everything appropriately. Then there's the packing at the other end and we haven't even started on all the services you need to change when you move house.
Luckily Classic Moves is a company that takes care of your entire move from start to finish. This is especially helpful if you're elderly or time poor. We highly recommend taking a look at them if you're selling up.
Back to renovating though, the other thing to consider is market volatility. If you buy an $800,000 property and spend $200,000 fixing it up, you need to sell it for $1 million just to break even. But if the market drops during the renovations, you can actually lose money.
For the regular homeowner, renovating makes a lot of sense. You don't have to worry about house price volatility (if you're not selling in the short term) and the $1 spent will bring $2 return rings true most of the time. But as with flippers, make sure you don't overcapitalise.
"We used to see a lot of people buying run down properties to renovate and resell", said Carl from My Bathroom Renovations. "But it seems the Melbourne property market is slowing down a bit which makes the whole thing a bit riskier".
It seems the real money is in subdivision and building 2 new homes, where there is more likelihood of a good margin.
"As long as you focus on bathroom and kitchen makeovers, you're going to do okay in the long run".
The other benefit of fixing up your home relates to your well-being. Living in a house that feels good will actually improve your mood, happiness and overall health. You get to enjoy the nicer layout, materials, appliances, every day of the week!
It can also be worth engaging the services of a building inspector, to ensure that the house meets acceptable standards. When performing a big renovation, identifying any key areas that need work, such as structural issues, is important to allow the reno to address these. This can be very important should you wish to resell your house down the track.
You might also look to replace wooden items such as staircase or balustrade. It can be hard to find an exact match in the shops which is why woodturning specialists are a great option. They can customise a timber product to fit in with your existing framework such as a post, chair leg or balustrade.
If you can't invest in a full home renovation it is worth targeting either the kitchen or the bathroom. Both these places are high activity areas and can make a big improvement in your day to day lives. Plus if you do sell, they are the rooms that people critique the most.
Another place you might look to fix up is the back yard. Many Australians have a swimming pool in their backyard which takes up a lot of space. Removing this pool can be one of the best investments done outside.
"Creating space for a garden or entertaining area can add huge value for a homeowner", "Tom Burns from Reverse Pools told us.
"A pool is only used for a couple of months of the year and the rest of the time it's wasted space".
With the property marketing booming, freeing up extra land is a very smart move. This allows you to enjoy it any way you wish, or even subdivide and generate extra money.
Then you will definitely be able to afford that renovation inside!
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About Elliot Dean 
Health Guru and Web Specialist
13 connections, 0 recommendations, 52 honor points.Joined APSense since, May 5th, 2016, From Melbourne, Australia.
Created on Sep 4th 2017 23:16. Viewed 847 times.
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