What Renovations Add To The Value of a House?
With the new release of the government “home builders” grant, I thought it would be a good idea to blog about one of the most common questions that my clients ask me. ” What renovations or changes give the best return on investment for the sale of a house? I am a mortgage broker, I deal in finance, and that is my field of expertise. I will give a bit of guidance in this blog as to what I have seen in my experiences. However, as what looks good or works well on a property or in an area can be quite subjective, I would advise you to get as much advice from relevant professionals in the field like real estate agents, valuers, and maybe even an interior designer.
These professionals would be able to tell you what is in fashion, what is sort after in your area ie, a four-bedroom house as opposed to a three, and perhaps where you are over or under capitalising.
I base my blog today on my experience when financing clients’ renovations and seeing the before and after valuations by the lender’s independent valuers. I also base this on renovating to sell the home and attain as high a price as you can. If you are renovating for comfort and would like to put in a tanning room, by all means, do this and read no further.
From a capital gains perspective, though, the tanning room would have a terrible return on investment. I feel that improvements can be divided into nice-to-have and must-haves. The latter, in my experience, add the real value to the home when selling. Nice -to-haves for me add convenience and add to the saleability of a home, but do not really add the figures to the asking price. This can often be seen when the valuer comes around after the install. A swimming pool is one of the most notorious of these. Very rarely does the $40 or $50 thousand dollars you have spent show up in the valuation you order afterward, you would be lucky to see $5 or $10 thousand in the new asking price. This would be a classic example of over capitalising It does, however, make your house more desirable than the other 3 bedroom homes you are competing against and could result in a quicker sale.
Classic examples of “nice-to-haves” that do not deliver the goods in my eyes would be
- Double Glazed Windows
- Solar Panels
- Swimming pool or spa
- Tanning rooms 🙂
- Pizza ovens
- Car Ports
Where I often see the best gains when it comes to improvements to a home, is where essential rooms may be added. Taking a home from one bathroom to two can often add much more than the bathroom’s additional price to the final sale price. This is assuming that the bathroom you add is in fashion and not an eyesore. Again liaising with the relevant authorities on this would be a good move before pulling the trigger on the tilers. Small improvements like a lick of paint or rendering a face-brick home could have a huge impact for little cost, again if tastefully done. Revamping of bathrooms and kitchen areas, if outdated, are also always a winner in my experience.
Examples of good investments when it comes to renovating in my eyes are as follows.
- Extra bedrooms
- Additional bathrooms
- Bathroom revamps
- New Kitchens
These are to name a few. By getting expert help before deciding what to renovate on your home, you could increase your home value substantially with a minimal investment. The key, though, is to do your homework and liaise with the right people. A good Mortgage broker would not be an expert in this field. A builder or real estate agent or valuer would be. A good mortgage broker would be able to help you set up the finance you require and structure it to suit your needs. Castle Mortgages are mortgage brokers from Adelaide, who serve Adelaide and the surrounding areas. If you have a renovation and would like to have a chat about finance of the new builders grant from the government, get in touch with us. If you need any assistance with finance, Castle Mortgages are the brokers to speak to.
This is a blog and opinion piece and in no way should this be taken as advice, your individual circumstances and home are just that, and you should seek expert advice before moving forward with any type of renovations.