Things To Consider When Renovating a House

According to the Australian Bureau of Statistics, Australians spent approximately $8.7 billion on home renovations in 2018.

Before taking the plunge there are a lot of things to consider when renovating a house.

Ask yourself, who am I renovating for?

Your audience should determine the budget and quality of items you invest in.

Focus on areas providing the highest return on investment, whether it’s by appealing to your lifestyle, investing for financial success or appealing to the masses with a future sale in mind.

Typically, renovations will fall into one of three categories:

1. Home ownership

You’ve bought a forever home and want to make it your own or refresh your surroundings. Look at key areas to make your house feel like home. If you’re an entertainer, you may like to add an outdoor room or revamp kitchen or bathroom areas.

Invest in high quality structural changes within areas important to you. You can save on soft furnishing updates later if needed. Focussing on structural integrity means you can enjoy the space without ongoing maintenance issues.

2. Property investing

Attract good tenants to your property by ensuring renovations are in a style that’s clear of clutter and visually appealing. When renovating this type of property, look at four key areas:

• What can you keep or refurbish to save money? Keep anything that adds character. Replacement of windows and driveways is expensive, so work with what’s already there.
• If you don’t want to keep items, sell online or at salvage yard. Items like bricks, doors, fencing, gates, bathtubs, copper and fireplaces can provide money to reinvest in renovations.
• Items you don’t want, yet are in good condition may help others, so donate to charity and be environmentally friendly.
• Owners of investment properties wanting to scrap items, may be eligible to claim tax deductions when items like carpet, dishwashers and cooktops are replaced. Look into tax depreciation as you may be entitled to thousands of dollars.

3. Flipping for profit

Here, you want to make every cent count. Renovate strategically to generate the highest return on investment. Focus on bathrooms and kitchens, as improvements in these zones traditionally deliver higher sale returns.

Appeal to the masses by researching the suburb and making the property inviting. Consult experts such as local real estate professionals to assist in renovation planning and invest in styling for the home to attract the right buyers.

Restrictions

Check with local Council for any Development Application (DA) approvals needed and noise restrictions, especially with major works.  If the property is strata affected, consult strata management before commencing. Mistakes can be very costly and worst-case scenarios can result in knock down and rebuilds.

Budget

Budget for infrastructure first. The general rule is to add 20% to the expected spend. Do this after consulting trades such as builders and architects and requesting quotes including written scope of works.

Obtain an estimate of costs and discuss these with a quantity surveyor to find any depreciation deductions on investment properties.

Research finance options to secure the best deal and don’t forget insurance. Your home and contents insurance may not cover extensive building works. It may also void your policy and leave you unprotected.

You may find your policy only covers an inhabited house, so if you move out during renovations, you may not be covered. Contact your insurer to check policy inclusions, especially public liability and home and contents insurance during renovations.

BMT Insurance can provide a quote for house, contents and landlord insurance. BMT also has a Replacement Cost Estimator to help you determine how much it will cost to replace your property if needed.

Before renovations start

Before renovating, check for the location of cables, electrical, water pipes, gas lines, load bearing walls and asbestos.

Having a comprehensive plan of works including step-by-step processes and timings, outlining who’s responsible, purchasing and decision deadlines will alleviate any confusion or nasty surprises.

Engaging a specialist project manager can help keep the project running on time and budget which is particularly useful if you work full time and won’t be present during renovations.

Bathroom case study

Renovating a bathroom can add significant value to your property as these are high traffic areas and can change the feel of a house.

The Australian Taxation Office allows owners of any income producing property to claim a tax deduction for the wear and tear of assets.

Here’s an example of how claiming depreciation can boost a property investors cash flow.

The table shows common bathroom assets and their original purchase value, first year depreciation deductions and cumulative five-year deductions.

Renovation timing

Timing can affect the success and cost of a renovation.

Painting in Winter may mean it takes longer for paint to dry. Replacing driveways or installing a pool at this time can also result in delays as concrete won’t set quickly.

Looking at the seasons and scheduling work appropriately can result in the difference between securing trades, getting materials at a decent price and completing renovations on time.

Renovation precautions and tips to consider

There are many things to consider when renovating a house. Don’t forget the following:

• Renovating process: Stick to your plan and ask questions to ensure you understand what’s happening. Late changes can be costly, especially if rework is required.
• Trades: Seek recommendations from trusted people, including tradespeople and friends. Look at websites and job sites to see the quality of their work. Look after the tradespeople you employ. Let them know where to park, take breaks, access food, beverages and a bathroom.
• Measurements: Many people forget to check door widths and you want to be sure all purchases fit through the door.
• Warranties, instructions and receipts: Keep warranties and installation instructions together and centrally located so contractors can access them. This is also useful for future buyers if you choose to sell later. Keep tax receipts separate.
• Furnishings: Source covers or tarps to protect assets.
• Neighbours: Put a letter in the mailboxes of those affected. Outline the expected start and completion dates and your contact details.

Plan ahead and take precautions so you get to the end of your renovation happy with both the process and the result.

SOURCE: www.soho.com.au