“There is no hard and fast rule when it comes to the perfect time to renovate a property for the purpose of adding value,” says Tony Clarke, MD of the Rawson Property Group. “It all boils down to what condition your home is currently in, what other properties in the neighbourhood are like, and how long you intend to wait before selling.” While the best way to get an accurate assessment of these factors is to consult a real estate agent in your area, the following situations could indicate the potential for a profitable home improvement.
“The nicest house in the neighbourhood will have fewer opportunities to add value than the ugly duckling on the block,” says Clarke, “so if you’re already in the top tier of properties in your area, renovating purely for profit may not be a great idea. If your home is outdated, run-down, or less comfortable than your neighbours, however, a few renovations could add significant value.”
“Take the current value of your home and compare it to the highest average listing price for top-tier properties in your area of a similar size to yours,” says Clarke. “The difference between these figures is the maximum amount you could spend on renovations and potentially recoup on a sale. If the difference is minimal, consider focussing on maintenance rather than major improvements. If the difference is significant, however, there could be room to renovate key areas of your home and see a decent profit.”
“Never underestimate the value of maintenance,” says Clarke. “A well-loved and looked after home will always sell better than a run-down one, even if it’s not as modern or trendy as it could be. Refurbishing basic structures, fixtures and fittings may not be as glamorous as a full renovation, but can have an excellent cost-to-return ratio. If your windows, doors, lights, air-conditioning or other property features have seen better days, seriously consider giving them a once-over.”
“Unless you’ve bought a fixer-upper for a steal, it can take a few years for the cost of improvements to be fully reflected in your sales price,” says Clarke, “so if you’re planning on selling within a year or two, you may be better off sticking to more affordable, cosmetic upgrades.” There are some exceptions to this rule, however. “Kitchen and bathroom renovations are renowned for giving the most bang for your buck,” says Clarke, “and if these areas are very outdated or in bad shape, a smart renovation could pay off in the short term. Remember to keep your budget realistic, though, and keep the price ceiling in your area in mind at all times.”
“Your house isn’t just a financial asset,” says Clarke. “It’s also a place in which you and your family should be able to thrive. Quality of life is very valuable, and shouldn’t be discounted when weighing up the pros and cons of a potential renovation. That swimming pool, or games room or workshop might not pay for itself when you sell, but the value it adds to your life in the meanwhile could still make it a good investment.”
