Property is, without doubt, the most popular way of investing in, long term, for most people.
We all know the reasons. It not only gives you somewhere to live and work from but in normal times, property increases in value and keeps pace with inflation.
Once your mortgage or loan pays off, if you are borrowing to buy a property, you can use the equity (the value of the property) as collateral to borrow against – or you can sell the place for a profitless any taxes due, of course.
It’s a long-standing adage in the property game that the best way to make money is to buy a wreck at the low point of the market and “do it up” to sell it on as a profit or increase its value for a rainy day.
Buying a property that is perfect, at the top of the market, will not make you as much profit – but it will be a lot less work.
The journey from wreck to perfect property is tortuous if you’re not into DIY or have the spare money (and the useful contact) to pay tradies. Any house will usually need more than just a lick of furniture polish.
If there is major work to be done, you might even have the expense of architects and planning specialists and structural engineers. This doesn’t come cheap.
It also depends on whether your property is going to be lived in by you or is going to be an investment property that you rent out.
You would put up with far more inconvenience with building works and noise than a tenant who is paying good money to rent somewhere.
Of course, DIY and multiple trips to Bunnings aren’t everyone’s idea of heaven. Some people are happy to get stuck in and improve their property themselves, others are not so confident in their plastering and woodwork skills, let alone touching electricity and plumbing.
One trend to come out of the pandemic situation is that of people wanting to set up home offices in spare rooms, garages, and even sheds in the garden.
Even if your primary goal in remodelling your house is to increase your living space or create a nicer landscape, many of these projects will also increase the value of your property.
Your renovation should increase the value of your house if you want it to pay for itself. The worth of your house will not increase substantially if you’ve already paid the maximum amount for it. This is the highest price a buyer will pay for a home on your street before looking elsewhere for a comparable home in a better neighbourhood.
Of course, it also depends entirely on where you live. Adding an ensuite bathroom to a property in Sydney will add more value than one in, say, an obscure little town in Queensland, even though it may cost the same amount to build.
This is just basic economics and something that you need to consider before you look at your remodelling choices.
Something as simple as putting up some timber screens in a garden to disguise an ugly feature, drain or HVAC air pump, may not “add” value; but it might prevent someone from asking to lower the price – which amounts to the same thing.
As we mentioned, a post-pandemic “must have” for many houses now is an office or study area. These can be as simple as a boxroom converted by putting a desk and some bookshelves in, or something more permanent, which is enhanced with good quality accessories like home office chairs and office stools that complement the design.
Attic and garage conversions are another favourite way of creating more space within an existing structure. With most of the construction already done, utilising these areas is a very cost-effective way of renovating and increasing your property’s value at the same time.
According to bark.com, a garage conversion can boost your home’s value by up to 20% – and an attic conversion, which adds an extra bedroom, can increase the price of the home by up to 15%.
Dormer loft conversions with a double bedroom and en-suite typically cost between £35,000 and £45,000, depending on the size of the room and the complexity of the project.
$41,922 is the average price of a loft or attic conversion.
It may cost up to £5,000 to convert a garage, depending on how big the space is and what you want to do with the area.
The renovations we’ve mentioned so far have all been visible – but there are now a host of renovations that you can make to your home which is equally valuable – but invisible.
With insulation and the “greening” of homes a hot topic at the moment, and climate change at the forefront of everyone’s minds, government guidelines are being altered constantly regarding the thermal efficiency and environmental impact of housing. It makes sense that retrospective refits should be front and centre of your renovation project from the start.
Wall and loft insulation are the most obvious of these home improvements. There are many types of insulation available, from wool sacks (sheep’s wool packed into bags) to high-tech solutions like aluminium foil backed polystyrene panels.
Floor insulation is another consideration, along with underfloor heating, which can be electric cables or water-filled pipes working with a heat exchanger or geothermal system.
Of course, the ultimate value-add to any house is the garden.
According to a survey of 36 estate agents, the garden improvements which significantly add value to any house are:
- Decent sized shed 82%
- Good quality patio/paving 76%
- Secure fencing/walls/gates tab 72%
- Adequate outdoor lighting 66%
- Sturdy decking 62%
- Water features e.g. fountain/pond 58%
- Well designed garden furniture 54%
- Artificial grass/lawn 40%
The obvious reason for these features adding so much to the equation is the upkeep aspect. The last thing people moving into a new house want – especially those with younger children – is a whole load of maintenance problems to sort out.
The more you can reduce the negatives of the “work” aspect of house-buying, the more you can expect the value to be enhanced.