Are you thinking of renovating your house or property? Renovating a property is more than just a pure financial decision. It can have significant implications not only for your cash flow, but also for your lifestyle.
So before you get things rolling, pause and make sure you’ve considered everything.
To help make renovating worry-free and less stressful for you, we’ve compiled a list of 7 things to consider before you begin!
1. First things first: ask yourself, “Why am I renovating?”. And most probably, your answer is either of these two:
- If you’re renovating to enhance your property’s liveability, extend, update or fix it up to rent out or sell, then, you may look at it more logically and from a return on investment perspective.
- If you’re doing it for family or personal reasons, then it can often involve a more emotional spend which can make you over-capitalise and get carried away!
2. Consider getting an independent valuation for the property so you can have an idea of what other properties in the area are valued at. The value of a property will largely depend on supply and demand and what buyers are ultimately willing to pay. Once you know your property’s current value, you can work out what is reasonable and worthwhile spending, so you don’t over-capitalise and put a dent in your cash flow when you renovate.
3. It’s wise to put together a budget and keep a close eye on it throughout the whole renovation process – costs can escalate quickly!
4. Make a list of your needs, wants and ‘nice to haves’ for your property. It can be easy to get carried away so it’s important to try to keep things in proper perspective. Cutting back the ‘nice to haves’ can help save your budget without compromising your needs.
5. Don’t forget to consider where you will stay while your property is being renovated. In some cases, you may be able to live through the renovations particularly if they are only short term, minor or cosmetic. But for bigger, structural renovations you may need to move out for a few weeks, months or even longer! Will you stay with friends or family, or rent another place? Money for rent should be part of your budget.
6. Think about how you’re going to pay for the renovations. Are you using equity in your home loan or redrawing an amount from a line of credit or other financing arrangements? If so, factor in the extra repayments, fees and any implications this will have on your lifestyle.
7. And finally (a very important step before the first nail gets hammered), it pays to first check with your local council (as well as your body corporate – if you live in an apartment or townhouse) as you might find that there are certain local planning laws (and/or strata title rules and regulations) in place that may put restrictions on your renovation plans. If you skip this, you might end up spending more!
Renovation shows like “The Block” and “Renovation Rescue” often make renovating look simple and glamorous. In reality, a renovation project can be stressful for you and your family. But if you take into consideration the above points discussed, then you save yourself from the headaches that go with renovations because you’ve got all your bases covered.
If you think you need more help and advice, contact Stonehouse and book an appointment with any of our expert financial advisers.