How to add value to your property over summer
From adding aircon to a new outdoor area, you'd be suprised what can add value to your home.
Summer is a great time of year to tackle some of those home renovation projects you've been thinking about for a while. It may be tempting to escape to the beach, but taking time to make improvements during the break can do wonders for your home's value in the long run.
Research by Finder shows property hunters would actually pay extra for a home with air conditioning, a garage and an outdoor entertaining area, which is great news for those of you just starting to dip your toes in the home reno realm.
So before you get started, here are some tips to get the most out of your summer renovations.
Do your research
Know how much your renovations are going to cost. It's always a good idea to get at least three quotes so you can get a true representation of how much each job is likely to cost you.
In saying that, even with quotes, it is a good idea to factor in a budget buffer just in case you go over your estimate.
If you get a chance, check out any open homes or properties for lease in your vicinity. You'll get an idea of which features other houses in the area are offering and how much they are going for. If possible, go to auctions in the area too.
Don't overcapitalise
Overcapitalising means that you have spent more on the renovation than what you'll receive in added value to the home.
Many renovation experts dictate that you should not spend more than 10% of the current value of the property on renovations, so this is really something to be aware of when you're planning.
While you don't want to skimp and get the cheapest builder or materials, you also don't want to spend so much that you won't make your money back when you do decide to sell.
Look beyond the kitchen and bathroom
The first thing that comes to mind for a lot of people when they think of "home renovation" is a new kitchen or bathroom. These can be great ways to modernise your home, but they may not create value to others.
Not every buyer is seeking a modern kitchen or bathroom. For example, some might prefer to renovate it to their own taste once they've moved in. That's not to say that kitchen and bathroom renovations don't add value, but it is important to weigh up the cost of the project against potential benefits.
Instead, consider adding extra features that offer clear-cut benefits. Some examples include:
Air conditioning. The scorching Australian summers make air conditioning a must-have among many potential buyers, with many saying they'll pay more for the privilege.
Garages or carports. 92.5% of Australian households have a car, with an average of 1.8 cars per household. This can make parking options a valuable consideration for homebuyers.
Outdoor areas. Particularly in Australia, outdoor entertaining areas such as decking are a desirable feature for families or those looking to spend time with friends outside.
These are not only often the cheaper option, but also help to beef up your real estate listing with extra features in your home.
Know your financing options
Picking the right financing options will depend on the type of renovations you're looking at doing as well as your mortgage.
- Take out a line of credit or home equity loan. This allows you to borrow money using the equity in your home.
- Use your redraw facility. If you're ahead in repayments, you might be able to redraw on your current home loan (if this is a feature included in your mortgage).
- Refinance your mortgage. Have you been on the same rate or with the same bank for a while? Maybe it's time to find a better mortgage. When you approach your new lender, the best way to approach this is by being upfront. Tell them you'd like to borrow extra money for a renovation.
Renovations can be a great way to freshen up your home and add value at the same time. Although getting started can be a little daunting, knowing all the options available will get you on track to do some renovations this summer without breaking the bank.
