It’s one of the most common questions being asked in residential building, the answer everyone wants to know when partaking in a home-renovation; “exactly how much value will a renovation add to my home?” And if only the answer was as simple as asking that question! However the thing is, the answer will be different for everyone as there are several factors to consider because of the bespoke nature of the work, and there isn’t a one-size-fits-all solution.
Some of the factors that come into play with evaluating the value of a renovation include:
- Strength of the real-estate market
- The extent of renovation
- Suburb and driven by planning constraints
- Construction methodology and materials used
The number one key to maximising the return on your renovation is simply by research. For example, if you want to maximise the value of any renovation, then you would investigate the real estate market for comparative properties and supply and demand. This will allow you to have the best indication of what the value of your home may be worth.
Another main element that drives value is the extent of renovation. A kitchen or a bathroom renovation may be a lower capital outlay but it may provide a lower return on investment. A significant renovation such as extending out and up, whilst more expensive may also provide a higher return on investment. Even with lower value renovations, the key is spending it in important areas. For example $40,000 kitchen can easily correlate with an increase in value, opposed to spending $40,000 on necessary retaining walls that doesn’t translate to adding the same value.
Some suburbs especially those with heritage overlay constraints don’t give you any option but to renovate and that too only to the rear of the property. So this will also impact the extent of renovation that you can undertake.
Construction methodology and materials used for the structure will also impact on the type of renovation and whether a renovation is even possible. To determine this, you will need to discuss this with your Architect and/or Builder in depth.
With all the above in mind, we always suggest to our clients that they undertake a renovation as a long-term proposition that effectively addresses their requirements without seriously over-capitalising on the property. Therefore, it is essential that both your chosen Architect and Builder work together to introduce a clever design and build that gets the most out of your existing property.
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