Working out whether or not it’s worth renovating your home before you sell will save you unnecessary hard work and stress in the long run, but how do you work out if your property’s worth renovating?
This is a great question – one that everyone who is considering a renovation project should ask: is the time, money and effort worthwhile? Will I make a profit in the end or am I just doing it for the enjoyment of the end result?
To make an informed decision on whether renovation is sensible, you firstly need to work out the current value of your home or investment property. Talk to local real estate agents – they should be able to give you a rough idea, or you can get a valuation done for a fee. Also try APM PriceFinder to get a gauge on the current value of your property.
The next step is to work out what your property would sell for after you’ve carried out improvements. This can be done by visiting real estate agents or the same websites listed above and looking at similar-sized and structured properties in the same area. Ideally, these would have improved or better features than your home in its current state (that is pre-reno). This can be a long process, but this type of research can give you an idea of the upper threshold of what you may be looking at selling or revaluing for, once all the work’s been done.
Now you need to cost your renovation. You may already have a good idea of expected expenditure, but if not, now is a great time to plan what is going to being done and how much it’s going to cost. This may involve formal quotes from tradies, and pricing of required materials.
The potential profit resulting from your renovations can be worked out as follows: Potential value of your property (once renovated) LESS the current value of your property LESS estimated cost of renovation LESS other costs (such as insurance, holding costs, selling costs) EQUALS potential profit or equity.
Remember, the resulting profit will change if you blow out on your renovation cost or miscalculate the potential value of your property. Consider speaking with professionals such as real estate agents, a renovation consultant and tradespeople to ensure that your estimates are as accurate as possible.
In addition, you need to be confident that you are willing to commit the time and effort to see the renovation through, as well as potential loss of income from the property over the same period. If you are happy with the calculations, and prepared to living with a certain amount of risk, it’s time to commit to the project. With good management, planning and practice, you’ll not only make a profit, but gain a real sense of accomplishment from what you have achieved. Good luck!
Jane Eyles-Bennett is an Interior Designer & Renovation Consultant. She’s the creator and driving force behind Hotspace Consultants and has consulted on over 550 property renovations. [Article source}.
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