7 things to consider before starting a renovation
Are you planning a renovation?
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 going take stock and make sure you’ve considered everything.
To help make renovating more of breeze, and less of a storm, we’ve compiled a list of 7 things to consider before you begin!
1. Be clear on why you are renovating. There are many reasons to renovate a property, you may want to enhance its liveability, extend, update or fix up a property to rent out or sell. If renovations are for family or personal reasons, then it can often involve a more emotional spend and it can be easy to over-capitalise and get carried away! On the other hand, if the renovation is a pure-financial one and you plan to rent out or sell the property in future, then you may look at it more logically and from a return on investment perspective.
2. Consider getting an independent valuation for the property. This can be a good way to get an idea of what other properties in the area are valued at and help you work out what is reasonable and worthwhile spending, so you don’t over-capitalise.
3. Put together a budget and keep a close eye on it throughout the process – costs can escalate quickly!
4. Make a list of your needs, wants and nice to haves. It can be easy to get carried away so it’s important to try to keep things in perspective. Cutting back the ‘nice to haves’ can help save your budget without compromising your needs.
5. Consider where you might live while you renovate and factor this in. 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?
6. Consider how you’re going to pay for the renovations. If you’re using equity in your home loan or redrawing an amount from a line of credit or other financing arrangements, factor in the extra repayments, fees and any implications this will have on your lifestyle.
7. And, before you put hammer to nail, 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 certain local planning laws (and/or strata title rules and regulations) in place that may put restrictions on your renovation plans.
Renovation shows like “The Block” and “Renovation Rescue” often make renovating look simple and glamourous. But in reality, a renovation project can be stressful. Make sure you keep up the communication between you and your partner or family members and give yourself some space and time to relax if things become difficult or stressful to manage.
Source: Adviser fp Knowledge Centre / Innergi (Sep 2016)