Renovating is a good way to make capital improvements to your primary home or investment property. If you choose wisely and make good design decisions, a renovation should increase the value of your property, often considerably more than the cost of the renovation itself. It’s exciting to make plans and enjoy a real sense of satisfaction when the job is completed.
It’s also recognised as a primary source of stress. Budget blowouts, faulty work, miscommunication, council disputes, issues with neighbours, mess, dust, incorrect planning, legal cases – the list of problems can be extensive. Even a well-executed renovation will come with a few hidden surprises, which tend to negatively impact said budget.
Here’s some advice for how best to approach a renovation to make the experience a lot more painless.
Get a renovation professional to draw it up
Misunderstanding of the scope of the work is one of the biggest causes of budget blowout or legal argument. A well-drawn plan makes the expectations clear for all parties concerned. Use photos from sites like Pinterest or Houzz to explain what you’re after.
Determine your ‘Why’
Is it an investment or are you planning to live there? If you live there are you doing the renovation solely for your own benefit or with an eye to adding value for future resale? Renovating for yourself is not the same as renovating for profit. It is easy to overcapitalize on things that will not pay you back (gold leafed bathroom taps anyone?)
Understand that a renovation never specifies ‘one price per metre’
Your budget will be dictated based on where you spend your money. The cost per square metre will vary widely with rooms such as kitchens and bathrooms costing more. Extending the size of the house will also be expensive. A kitchen can cost anywhere between $10,000 – $50,000 depending on the work you do. Pulling out walls, especially supporting ones will tap the top end of your budget.
Simpler changes to bedrooms, lounges and living rooms will be more affordable. In terms of adding value to a property however most renovation experts agree that your kitchen and bathroom are the areas with the greatest influence on increasing your property value.
Ask for referrals
It’s likely your neighbours, friends, work colleagues or local retailers have used a tradesperson recently. They’ll be able to steer you towards – or far away from – businesses who will do a good job for a good price.
Get several quotes for your renovation
You may be surprised at the wide variety of prices you will get for the same job. This is because builders will often quote based on their workload. A busy builder isn’t so desperate for work – a builder who may have a team sitting around twiddling their thumbs will be keener to get the job. Just remember that cheapest isn’t always the best – there may be a reason why that builder doesn’t have any work on.
Determine whether materials are included
It’s important to make sure you are comparing apples with apples. Most builders will provide material but some may give you the option of sourcing the product yourself. Some will give you a fixed price quote for the job while others will talk an hourly rate. Hourly has its advantages if you have tight control of the activity and are willing to act as project manager but can lead to budget blowouts if you don’t know what you are doing.
Financing your renovation
You need to determine how you will finance the renovation and how you will deal with any cost overruns should they happen. Make sure you have finance in place in advance. Refinancing an existing equity loan will be one of the cheaper options with construction loans generally costing more in interest. A line of credit can be one of the more cost-effective options as it allows you to draw down only the amount you need. Make sure you check the fine print so as not to breach the terms of the loan.
Talk Talk Talk
Communication is key to a good outcome. Make sure you use a method all parties are comfortable with such as email, SMS or printed briefs. Use pictures to show designers or builders what you’re after, and proactively pursue work-in-progress updates. Regularly inspect the work and highlight any issues immediately. Don’t be afraid to confirm things in writing: renovations are completed in many stages by many trades and it’s reasonable that some conversations will be misunderstood or forgotten entirely, especially if included as part of a broad conversation.
Be tough but fair
During a renovation it’s difficult working with a customer who cannot provide clear guidance and make decisions. It’s also difficult working with a customer who is inflexible and unreasonable. Don’t be afraid to speak your mind as you are the client, but also recognise nothing goes to plan and humans make mistakes. It’s important you find a common ground.
Above all check and double check the specs. Errors can be costly and you don’t want surprises that will leave you out of pocket. Consult with an expert who has done this type of thing before and be aware of the pitfalls you may have to contend with.
If you’re trying to save for something big – like a renovation – you don’t need to do it alone. A financial adviser (or planner) spends their days identifying and presenting opportunities to their clients. Our simple, quick, free service will connect you to the best independent financial advisers, based on your needs. Click here to get started.
The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a financial adviser or other finance professional.