What exactly is the ideal budget to spend on a home renovation? And will this matter even if a resale of your home is not a principal factor in your plans for the near future?
Overcapitalising on home renovations or extensions is usually a major concern when property investors plan to sell soon after construction is completed. But this can also be important to long-term homeowners who want to ensure their financial standing, especially for retirement and other future needs. And any fear of overcapitalising or under-investing could derail a homeowner from potential profits when the time comes to sell their home.
So how would you know what a sensible budget should be, in your case? Here are some considerations to evaluate how much you should spend on your home renovation.
What is the “right amount” to spend on home renovation?
In truth, there is no one magical equation to inform you of the “right amount” to spend. You can, however, end up spending too little or too much, based on what the optimum budget would be in your particular case.
Renovation and repairs
First, consider if the renovation or extension will make a difference. How will it enhance the lifestyle you seek today and into the future?
Secondly, does your home have structural problems or issues? Addressing them should be another major goal in your renovation plans. Otherwise, you could run into more problems after the project is completed.
For instance, if you add a house extension now and decide you will deal with structural issues later, you could end up spending more than what you intended for future repairs and modifications to your renovation. But on the other hand, if you completely rectify the structural issues first before you even plan your renovations, you may be needlessly limiting what your renovations can change and miss an opportunity for a better floor plan layout.
The right idea is to plan for everything first, structural issues included, for optimal functionality and flow in your home. Planning before investing in any renovation gives you the best value.
Get the advice of professionals
Speak with your local Real Estate Agent for an indicative value of your property as it stands now and with the renovations you would like to build.
Talk to your builder regarding their advice on the current building rectifications required.
Speak with your home designer about getting this balance of “the right amount” for you to spend and the best use of space for your budget. While planning your renovations, it is wise to include rectification of the structural issues.
Both your builder and home designer can also advise you on how to save on costs. The most trustworthy professionals know all where the best-priced materials and reliable labour can be sourced, and when to schedule your renovation to avoid seasonal issues that make your project more costly.
Once you have all the information, you can peg down what a reasonable budget is for you.
Keep your eye on the details
Once the project ensues, be on top of every detail. Even as you focus on the big picture, remember that keeping your eye on the details will help you achieve that picture. It’s the only way for you to make sure you stay within your ideal budget.
Ensure you focus on getting the structure and dimensions right. This means you want to make sure the windows are well positioned for ventilation and views. Also, you want to have your ideal floor plan layout before focusing on the fit-out of each room. To modify the structure in the future is considerably more expensive than changing, or completing the fit-out, of a room or two.
Every extension impacts the roof design. Therefore, planning to change the roof a minimal number of times is most cost-effective.
A typical extension at the rear of the property will include moving the kitchen to the new section. This will have the ramifications of renovating the vacated space or room where your kitchen used to be. That space can now serve as a new bedroom or dining room in the new plans.
The most expensive rooms to fit out are the kitchen and bathrooms. Among the least expensive are the children’s bedrooms.
Trade-offs to consider
For example, your budget may not yet extend to completing one of the bathrooms.
If your family can manage without this bathroom for a year or two, the best decision is to ensure that your extension includes this room. This means constructing the walls and plumbing through the floor and roof for this new bathroom now. You can add the door and leave it locked until you are ready to complete this room.
The quality and selection of the fixtures and finishes can impact the total cost of the renovation. For instance, you can make floors from modern manufactured wood and other varied materials that were once used only for kitchen benchtops and are less expensive than solid timber.
If you have the capacity, borrowing some extra money to complete the job may be worthwhile. Factor in the interest you will pay to the current costs and compare this to the increased costs that you would pay when changing or completing the fit-out later.
Structural renovations over cosmetic ones
A new kitchen in the same position is considered a cosmetic renovation. It will add marketability to your home, yet it may or may not add value when you sell.
Increasing the number of bedrooms or living spaces is more likely to add value when you sell.
Choose to style your home and room configurations to have a wide market appeal. This way you will have more prospective buyers when the time comes to sell.
Get the best renovation guidance
Most of us dream bigger than our budgets, so prioritising your dreams is essential. How your family wants to live in the renovated home is your best guide for what is essential and what is nice to have. This will give you the best guide on how much to spend on home renovation for your family.
If you need more specific advice or help with how to add value to your home through a renovation, call us at MK Home Design. We have many years of experience in the Sydney housing market we can share with you.
Related Posts
