Renovating can be costly and inconvenient, but can also increase the value and enjoyment of your home. We look at the main reasons for renovating and how to avoid overcapitalising.
Good reasons for renovating
There are two main reasons people renovate:
- To add to the comfort, use and value of the home.
- To tidy it up to sell.
Renovating can be a costly and inconvenient business. Before you launch into renovations, take time to consider whether the expense and disruption is justified.
Staying in the home
If you intend staying in the home you may want to:
- Add extra space to accommodate an expanding family, or simply to add a sense of spaciousness.
- Add rooms for special purposes, such as an office or games room.
- Change the configuration of the house for better flow, ease of use or orientation to sun and views.
- Update and remodel to give the house a fresher, more modern look – this could involve major changes such as taking out walls to enlarge a room, putting in a new kitchen, or installing new wallboards and ceilings. Or it could simply be a matter of painting or wallpapering.
- Restore the house to its original style (while adding modern features in some areas, like the kitchen and bathroom).
- Add value to increase your investment.
Renovating to sell
If you are renovating to sell, it is likely that you’ll want to give the house an inexpensive makeover to freshen it up and make it more attractive to buyers. For example, repainting, repapering, or changing dated or damaged fixtures, such as a cracked basin in the bathroom.
You need to consider the tastes of potential buyers, which really means keeping everything fairly neutral to appeal to a wider range of people. Not everyone warms to bright feature walls or pink bathtubs.
Renovations that will increase the appeal of your home may include painting the kitchen and bathroom, or putting in some decking to give an indoor-outdoor flow and an increased sense of space or some landscaping.
Don’t spend money that you won’t get back in the sale price. Ask a real estate agent for ideas to increase the house’s appeal, and how much you should spend without overcapitalising.
Tip: Take care to renovate to the existing style of the house and neighbourhood. People search in particular neighbourhoods because they like the age and style of houses found there. Giving your older villa-style house a very modern aspect, which is inconsistent with the other houses in the street, will lessen the range of potential purchasers.
Beware of overcapitalising
If you don’t intend selling, the money you spend on renovating will be an investment in the comfort and enjoyment of the house. Whether you increase the value of the home may not be an important factor in how much you decide to spend.
However, it is easy to get carried away with the excitement of doing up a home and overcapitalise by spending money that can never be recouped if you do end up having to sell. You may regret the $60,000 kitchen you put into your $200,000 house should unexpected life changes occur, such as a marriage breakdown, or a business failure. It may be money you never get back if you have to sell and apportion the proceeds.
If your house needs a great deal of work to get it how you would like, decide whether you want to go to all the trouble and expense, or whether it would be better to sell and buy something more suited to your needs.
Doing it yourself (DIY)
Many New Zealanders take on renovation, redecoration and alteration projects in their homes, usually in the belief that it will save them money. How much you can do yourself realistically depends on your skills, time and energy. There may also be legal restrictions on doing work yourself if you don’t have the right qualifications.
You need to consider Building Code requirements and getting building consent for some work.
Many people are very capable of painting and wallpapering, and some straight-forward carpentry work. Some have the skills to do more difficult renovations and alterations. However, before you take on any work around your home, consider all the aspects of DIY.