Do your renovation research
Knowledge is power – so before starting your renovating for profit journey, arm yourself with information to make the right decisions.
Try to research your renovation process as early as possible. Below are some of the renovation essentials you might want to scope out.
Renovation research
- What Council approval requirements you need
- How to put together an accurate reno budget and budgeting templates
- What parts of the renovation you might be able to tackle yourself
- Who the recommended local tradespeople in your area are – paying particular attention to quality, quotes and lead times
- What used items you could sell that you might be getting rid of – think selling a kitchen on Gumtree or eBay
- General renovation tips and inside track about renovating, including common mistakes to avoid
Renovate to sell
Remember that the aim is typically to appeal to buyers so you can sell at maximum profit. It’s not for your preferences and tastes, so try and take the emotion out of it. You might want to renovate with the market in mind. What are buyers looking for? What’s on trend? And will the upgrades stand the test of time if you decide to sell in future?
Target your buyer
Think about your target demographic (the type of buyer that might end up purchasing your particular type of property) and tailor the upgrades to their wants and needs. Assess the property and choose to renovate the areas and amenities that might catch the eye of your target demographic.
For example, young families might be looking for more space and a home that’s great for kids. If you’re renovating a potential family home, you could choose to focus on areas like the kitchen and living rooms and the backyard. You might look at creating flowing living spaces that are easy to maintain.
Professional couples may want luxury and convenience in an apartment that's close to the CBD. So, think high-end finishes in kitchen, bedrooms and bathrooms, as well as any entertaining areas and low maintenance outside spaces.
Home buyers may also be interested in things like home offices, and inside/outside areas. Allowing them to stay home, but also the ability to relax and go outside.
When thinking about what will appeal to the market generally, it’s best to keep it simple. Neutral, clean, classy colour schemes and fittings could appeal to a larger pool of buyers.
Set your budget and stick to it
When renovating for profit, setting your budget is one of the most important steps in the journey. It could make or break your project – so it’s important to get it right from the start.
Your first move should be finding out how much money you have available to fund the project . There are a few options you can explore:
- Home loan top up – if you’ve been in your home for a while or made extra repayments, you may have built up some equity over time. You can find out if this is the case for you using our equity calculator. You might be able to use this equity to increase your loan amount via a home loan top up and fund your renovation project.
- Redrawing on your home loan – taking out extra repayments you may have made on your mortgage and put them towards your reno.
- Adding a construction option to your home loan - gives you the funds to pay your licensed builder throughout the construction process or each stage of your renovation in chunks or instalments.
- Personal loan - applying for a personal loan could help you finance your renovation, especially smaller projects that don’t require much capital.
- Cash savings – rather than financing your renovation through a lender, you might choose to use money you have saved.
This amount will dictate how much you have available to spend overall on the renovation cost and also give you an indication of how much value, at a minimum, you could add to your property.
Budgeting example
Say you have $50,000 to spend on home improvements, and you’d like to upgrade your bathroom and add on a deck. After researching your options, finding out what materials might cost, getting quotes from tradespeople, you might find the costs come out roughly as:
Try to make sure you have a 10-20% emergency buffer to cover unexpected expenses that may pop up. Renos often don’t run smoothly, so keeping some money aside for any road bumps could help make the experience less stressful.
Cosmetic vs. structural renovations
Simpler is sometimes better – especially when you’re renovating for profit. It may be possible to make small, cost-effective improvements to existing fixtures that may make a big difference to a future sale price.
Tips for low-cost upgrades to your home
You might want to consider some of the following:
Updating your cabinetry with fresh paint, adding door handles or a new splashback, rather than a full-scale kitchen reno
Tiling over older style flooring in your bathrooms
Updating light fittings
Painting rooms that are tired and shabby
Ripping up and replacing worn or old carpet, polishing timber floorboards or laying laminate floating floors to create a fresh space
Looking for second-hand materials from renovation hubs instead of buying new
Do an inexpensive backyard makeover.
These slight updates could make a home much more appealing. So, consider how cosmetic improvements could add to the current property value before commencing a full-scale structural renovation.
Know when to bring in the professionals
As you now know, keeping expenses low is one of the keys to making a decent profit on your renovated home. One way you could do this is by taking on as much of the project yourself as possible. This might be things like painting
And it’s really important to know when to bring in the professionals. There are certain parts of a renovation that should only be carried out by qualified tradespeople.
When it comes to structural changes, you’ll need to engage an architect and builder. Electrical and plumbing work should also be handled by certified trades.
Assess what you think you can confidently handle as part of the renovation project and outsource the tasks that are outside your skills to your team of tradies.
It's important to note that the key here is to do the job once – and do it well. So, while it may cost more to bring in a tradie, it’s money well spent if the work is done properly. It could save you in the long run. Also, tradies are often a fantastic source of knowledge about how to revamp a space as economically as possible.
Ready to renovate your property for profit?
Westpac can help you fund your project. The best way to get support for your renovation needs is reach out – we’ve got experts ready to walk you through your options. Call us on 132 558 or visit a branch to chat to your local Home Finance Manager.
