Renovating to make money – 6 tips to make it a success
Renovating is a great way to create money and increase your net worth, but it’s not quite as easy as painting some walls and watching the value of your house increase. There is plenty to research and consider before jumping in, which is all going to increase the chances of your renovation being a great success.
We will be building a new home in the next few years, and in the meantime have decided to sell the home we built 8 years ago, and take on an original 70’s house as a renovation project, which will ultimately become an investment property. While we are only two weeks into our renovations, we have done plenty of research over the past few years. These 6 tips will help you renovate your home to make money, which is going to help your family achieve your financial goals quicker.
1. Do your research
Spend some time researching the sold prices of similar sized houses in your area, both tired and renovated houses. The amount of renovations you do, and the level of finishes you choose, is going to depend entirely on the area your house is in. If renovated houses barely sell for any more than tired houses in your area there is going to be little point spending up big on your house, you will basically be throwing money away.
On the other hand, if houses renovated with quality finishes are worth hundreds of thousands more, it might be worth spending a little more money.
2. Set a budget
Once you have done your research, it’s time to set a budget. This of course is largely going to depend on the previous sale prices of houses in your area, but a general guide is to spend no more than 10% of your homes current value.
For example, the property we have just purchased cost us $240,000, so we have set ourselves a renovation budget of $24,000. We are doing as much work as possible ourselves, which is going to allow us to stretch our budget further.
3. Think of the areas demographic
If you plan on staying in your house long term, then personalise your house as much as you like. On the other hand, if you plan on selling your house in the next few years, it might be a better idea to consider the demographic of the area and the type of buyer you will be attracting. It’s best in this situation to stick to neutral colours; you can always add personality to your home using accessories.
4. It’s the small things that count
You don’t need to spend up big to transform your house. Try budget friendly changes like changing door handles, bathroom and kitchen fixtures, new paint and new light fittings. You can even get paint to change the colour of wall tiles, kitchen cupboards and benchtops, which can give a room a fresh look for only a few hundred dollars.
5. Create space
You don’t always have to add an extension to create more space. If your house has especially large rooms, consider dividing them to create extra rooms. For example, if you have a large master bedroom but no ensuite, you could remove a section from one end of the room and turn it into a small bathroom.
6. Organise finance
Once you have planned your renovation, it’s time to think about how you are going to finance it. We personally used People’s Choice Credit Union to finance our renovation. Personal loans are one option for financing your renovation, as well as refinancing an existing mortgage or using cash you already have saved.
Before you begin the finance process, it’s a great idea to use the People’s Choice Credit Union personal loans calculator to work out how much the repayments will be for the finance amount you require, and be sure that the repayments will fit into your regular budget.