How much is too much to spend on a renovation in a flat market?
We are in our 11th year of our property makeover business and I have only seen this type of market twice!
Right now we are looking at a different return on investment approach to the last few years. At this point in the market, the need is to present your property well, so potential purchasers are not sitting on their hands or alternatively - low balling your offer.
A year ago, investment was at a usual 3 x ROI just in value, not counting efficiency of time costs on sale, as the market is now. Therefore the investment return is switching to the unknown cost of a 'stale' property that is sitting on the market.
We are working with vendors to ensure their properties are clean, clear, well maintained and the furniture is fabulous. It is important that these properties appear more appealing than others the same category in order to win the competition stakes.
At times like this it takes careful planning and consideration of the cost of a renovation, as the immediate return may not put the cash straight back in your pocket. Knowing the local market intimately is essential to understand what is selling and why it’s selling in a slow market. Working together with your real estate agent and a property makeover consultant may save you some expensive mistakes.
We are working with someone who bought an apartment 12 months ago and whose investment has taken a slight hit, but she’s not planning on selling for at least 2 years and so an imminent kitchen renovation budget is undergoing some scrutiny before work commences.
So despite market uncertainty, we must weigh up our heads, our hearts and our wallets to come to a decision that works for the individual situation.
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Our client is installing a new kitchen, widening some doorways to create space and flow into a butlers pantry/laundry area. The cabinetry will be a pale grey shaker style for impact and she’s chosen some quality appliances to match with an eye on being ahead of the competition when she does sell.
However some compromise is required and so the benchtop will be a simpler base range Caesarstone saving $4,000 on her original choice and another $1,000 on two mixer taps that are more Nissan than Mercedes Benz. That’s $5,000 saved in total, more will be shaved by tiling rather than splashbacks and the kitchen will still be stunning and a great investment that will give her a few years of enjoyment while she lives there. Plus her property is more likely to sell when the time comes with a decent renovation.
So despite market uncertainty, we must weigh up our heads, our hearts and our wallets to come to a decision that works for the individual situation.
All in all, the due diligence and makeover blueprint must be followed in order for all investment to be done wisely. You can talk to us about that more.
Photo credit: Topsco Worktop Specialist
About Belinda Woolrych
Belinda Woolrych is an Author, Speaker, and the Founder of Papillon Styling & Renovations. She published her first book, Rightsize Your Home: The Empty Nester's Guide for a Stress-Free Downsize, in 2014. Currently, Belinda runs the franchise operations of Papillon Styling & Renovations.
You can contact Belinda on T:1300 870 272
or via email here.
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