Home Renovations Can Make Money For You
According to Angus Kell, New South Wales’s state manager for Archicentre, the national building advisory service of the Australian Institute of Architects, which in 2008 alone designed, inspected or provided renovation reports to over 20,000 households across Australia, renovators can stand to gain money even in these difficult times by following a well thought out renovation strategy.
“Given the recent downturn in the housing industry and all the turmoil in the economy, more people are opting to maximize the value of their properties by renovating them,” said Mr. Kell. “This makes good sense, at a time when interest rates are low and there is an increasing availability of tradesmen and builders.”
The cost of moving, taking into consideration the agent fees, legal costs, stamp duty, mortgage fees and removalists can cost $50,000 or more. This figure is more or less equal to a good start for a large renovation.
According to Mr. Kell, the primary reasons that people look to renovate include the increase in the value of their properties, hence the value adding component. But people may also renovate for the more traditional reasons, such as upgrading and improving houses that may be too old or too small, or even to improve their homes from an aesthetic and functional perspective.
“We are also entering a stage where the costs of running a home can be significantly reduced through the use of environmentally sustainable designs (ESD) and technology,” he said. “But if the bottom-line is to save or make money, then there are several basic tips, which Archicentre has put together through its many years of experience in the Australian property industry that can be of great help to renovators.”
In the past 28 years Archicentre has provided its range of renovation, design and inspection services to nearly 500,000 households and business across the country.
“We may be experiencing dismal times in the economy generally,” he added. “But even at such times, if people have the money to put aside to renovate prudently, then they can gain a lot financially. A well-planned renovation or extension to a house could see people recoup their investments with the possibility of a tax-free capital gain.”
People need to think and plan carefully when renovating. Several considerations need to be taken into account. In view of this fact, Archicentre has been conducting free renovation seminars across Australia to help inform and assist homeowners in their renovations. These seminars also provide useful information to help them save significant amounts of money and have seen good attendances in 2008.
Archicentre’s ten tips for making money whilst renovating include:
• Know your market. The completed project should not only suit your needs but be spot-on with prospective future buyers
• Make sure your house is structurally sound before you start. Have it independently inspected because termites, rot, old wiring and old plumbing could easily add $25,000 in unforeseen extras.
• Make sure that your design concept is top-notch – do not compromise on this. It is best to use an architect for this. “Architect-designed” on a real estate sign board can add as much as 10% to the value of a house.
• Make sure the working drawings are detailed and accurate. This will minimize costly variations.
• Don’t use expensive fittings and fixtures
• Make sure your builder and subcontractors don’t substitute your pre-agreed building materials with cheap alternatives – this could significantly reduce the quality and safety of your property
• Your construction system must be economical. Decisions about brick veneer, lightweight materials and framing all have major cost implications
• Your room sizes should be efficient – this is more valid nowadays as we all move towards a more environmentally sustainable culture. Your rooms should aim to maximize natural light and ventilation whilst minimizing the use of energy
• Try and obtain a minimum of three prices for all the works. This could save you thousands in the long run
• Your contract should have a “liquidated damages” clause, which penalizes the builder for time delays
According to Mr. Kell, it is also important to specify whether you are looking to maximize your financial investment returns through your property renovations for the short or long term.
“If it is the short term, then most people would be looking to renovate and enhance the aesthetics of the building,” he said. “But if you are looking at maximizing the long-term value, then the buildings will have to undergo significant structural and functional improvement, which are clearly thought-out.
