Is it really a renovator’s delight?

When you can’t find your ideal home within your price range, there is a good chance you will think about buying an older house to renovate or redevelop.

Your intention may be to make changes to suit your lifestyle needs, or your path might be to renovate for profit.

If you are thinking about buying and renovating, consider the following:

• Choose the location
  If you are renovating to suit your lifestyle but would like the option to sell in the future, look at areas closer to the city hubs, education centres or major transport routes. Research the value of other properties in the area. If the highest price is substantially less than the amount you think you will spend on a property, you may be overcapitalising. In which case, you may not recoup your investment when you decide to sell. Look at areas where the newer homes are considerably more upmarket and expensive than older properties and here you may find you can still spend a significant amount on renovations and not overcapitalise.
• Plan ahead
  Have a very good estimate on how much you can and will spend on renovations before signing the contract. It is better to over budget than under budget as there’s nothing worse than being forced to take shortcuts to complete the job or running out of money altogether.
• Assess the structure
  Before purchasing, you must do all the necessary professional checks. For starters, it would be good to know that the house is level, basically square and that the roof is sound. If not, you might be wasting money installing expensive new kitchens and bathrooms if the floors dip or the roof leaks. A formal building inspection will tell you if the property needed expensive structural work that may not be cost effective or within your budget.
• Stay in character
  Consider the character of the property and the neighbourhood because it is generally more appealing when renovations complement the integrity of the old home and its surrounds. Don’t make the mistake of designing something that will devalue the property; and if you plan to extend, ensure renovations are in accordance with local council and building regulations or they may make it difficult to sell the house in the future.
• Choose the scope of renovations
  As a rule, renovations to kitchens, bathrooms, and entertaining areas provide the best return on investment in the long term. Sometimes, there is even opportunity to add value by adding an ensuite or adding a bedroom. Talk to your local real estate agent about what appeals. Depending on the location and buyer likes, adding an ensuite or a deck rather than a fourth or fifth bedroom may better maximise market value. Landscaping can also be a worthwhile investment as first impressions are important. It can also show buyers that the hard work has already been done and the property is well cared for.
• Know why you renovate
  Renovating a property with a goal to sell and make a profit is an investment approach. If this is your goal, spend money carefully as you are primarily adding value to suit someone else’s taste and not your own. For example, you could easily overcapitalise through expensive fittings in which buyers may not see value. Research is critical when renovating to sell. You need to understand your local market and find out what buyers are looking for. Sometimes a fresh coat of paint, removing or replacing old carpet, updating cupboard fronts or bench tops provides the most return on investment.

Ask a professional to appraise the potential market return of the property before you start the renovation.

And for some buyers, where the existing house is not suitable or cost effective to renovate, the best option may to remove the existing and build the dream house.