Renovating for profit can be a tricky business in a cooling market. But it’s more a science than an art if you know the pitfalls. Here are six common mistakes to avoid.
1. Not having a plan
This obvious but common error is responsible for a host of renovating sins, from paying too much in the first place to under-estimating costs, over-capitalising and ignoring target markets.
Renovating for profit means most of your research should be done before you even put in an offer to buy a property. Understanding the ceiling price for fully renovated homes in your chosen suburb will give you a budget to buy and renovate. And understanding the suburb demographics will inform renovation priorities.
While markets have been running hot, renovators can rarely rely on rising markets to dig them out of a hole.
As a rule of thumb, experts recommend spending no more than 10 per cent of your property’s current value on a cosmetic renovation. That’s anything that doesn’t involve moving load-bearing walls or extending the roofline. So, updating kitchens with new cabinetry or benchtops, retiling bathrooms, painting, replacing flooring and landscaping.
For a structural renovation, owners looking to turn a profit should keep it to 40 per cent of the property’s value.
2. Not sweating the small stuff
Decision fatigue can set in early, but planning is essential to get the finish you want. Small things can have a big impact on the result, so research and source fixtures and fittings early.
Don’t leave it up to builders to choose your cornicing or tilers to choose your grout colour. If you’re unsure of design choices, consult a specialist or look online at the hundreds of renovation advice sites.
Top tip: If you go with white interiors, make sure the wall and ceiling paints are the same shade, or one will throw undertones. Ensuring they match gives a seamless finish that makes walls appear taller and the room larger.
3. Getting it back to front
Landscaping a backyard is generally not going to deliver a return on investment. Professional renovators always advise focusing time and money on the front of a house, primarily the facade. Street appeal is everything and, as the saying goes, you only get one chance to create a first impression. Rear yards should be neat and tidy but save the wow factor for the front.
Apart from street appeal, the other areas of a home that will give you maximum return on investment are kitchens and bathrooms. Spending on renovations should be guided by this.
4. Doing all the work yourself
It can really save money to DIY but know your limits. Sometimes it can be a false economy if a professional can do the job significantly better or faster. Weigh up how much your time is worth, particularly if you are taking time off from a regular job to complete renovation tasks. Also, keep a close eye on your schedule. If doing something yourself is going to delay professionals starting on another task, it may end up costing you more.
5. Neutral doesn’t mean boring
Just as you can go too bold, it’s also easy to go too bland. Buyers should have an emotional reaction to your property. You want it to be aspirational and on trend. The décor should strike the warm tones of a home, rather than a showroom. From a design perspective, keeping it warm means ensuring wood is part of your palette – particularly in bathrooms.
And it’s okay to inject personality as long as you know where to put the flair.
If you are confident your styling hits the target buyers’ tastes, it’s okay to make bold choices for non-permanent fixtures – tapware, lighting and window furnishings – but keep an eye on the budget. Statement fixtures can give a house a luxurious contemporary feel, but are simple to change. Steer clear of bold choices on more permanent décor, like cabinetry and carpets.
6. Wasting space
Before you consider extending a property, ensure the existing space is working as hard as it can. Try to work with what you have. Removing non-loadbearing walls or replacing windows with doors can open up cramped spaces. Look for space-saving design tricks, such as stealing cupboard space from an adjoining room. Converting an internal garage and adding a carport is also a cost-effective way to add internal space.