Shows like Selling Houses Australia have made renovating seem easy. All you need to do is whack up a few blinds, spray-paint the kitchen and make jokes about your English landscaper. But without the time-lapse photography and secret teams of behind-the-scenes workers, the reality is quite different.
Fixer-uppers can be a real money pit. Especially in older homes, unexpected renovation costs lurk inside ceilings, fuse boxes, nooks and crannies. Before you let your heart run away with an expensive reno, follow our ten tips for following your head.
1 – Talk to your lender.
A dilapidated property may be cheap, but don’t assume that means you’ll get a loan. If a property is in need of major repairs, it may not pass muster with the lender’s valuation and that could mean anything from a minor delay to losing your whole deposit. Before you sign anything, contact your ME Mobile Banker to discuss whether a property you’re considering could hit hurdles at valuation time.
2 – Arrange a pre-purchase inspection.
The best way to avoid budget blow-outs is to know what you’re up against. A professional pest and building inspection will show up any sneaky animal nests, rotting stumps, DIY electrics and friendly ghosts. A poor inspection doesn’t have to mean you shouldn’t go ahead, but you should take it seriously and adjust your expectations, budget and timeframe. Plus, a less-than-ideal report can be a useful tool when it’s time to negotiate. Impending fire in the roof? Knock some money off the purchase price.
3 – Remove the rose-coloured glasses.
If you’re surveying your picturesque kingdom from your future verandah, take a step back. Log out of Pinterest, slow down on paint swatches and stop hoarding soft furnishings. Yes, it’s romantic to imagine restoring a home to its former glory. But make no mistake: renovations are hard work. You’ll be putting yourself under physical, emotional and financial stress, potentially for several years. Be sure you’re really up for the challenge. This is major work, not just a home for those vintage salt and pepper shakers you bought “just in case”.
4 – Crunch some numbers.
Budget, budget, budget. You need to go into the project with your eyes wide open. Get quotes before you start – not one, but three for each contractor. Ask friends, family and local Facebook groups to recommend reliable tradies. Make the mother of all spreadsheets – you’re going to be keeping track of permits, builders, plumbers, electricians, surveyors, and which hardware store does the best sausage sizzle. Do the numbers add up? Add 25%. Can you still afford renovation costs if everything goes wrong?
5 – Contact the local council.
Building regulations have changed in many areas in recent years. You could face restrictions on what you can do to the property and what you must do as part of a refurbishment. Make sure you know what you need to apply for and when, and factor in the extra costs before you start. A good builder or project manager will know exactly what’s needed for the area and scope of your project.
6 – Don’t overestimate what you can do yourself.
You’re right: you probably can learn how to install a toilet from YouTube. But don’t assume doing it yourself will actually save you time or money. Unless you’re a tradie or have excellent DIY skills – more than making a pencil holder in highschool – you could do more harm than good. Getting your hands dirty can be great fun, but leave the real work to the pros. A top-notch finish not only enhances the value of the property, it ensures your home meets council building standards. And you’ll avoid the extra costs of fixing the sinkhole under your new laundry and buying tissues for the tears you’ve cried.
7 – Don’t overcapitalise.
The cost of renovating a house can be more than what the home is actually worth. The money you put into your new home should be less than how much you could get if you sold it. Especially in a changing property market, you need to make sure the renovation is financially viable. Do your research: look at local sales, interest in the area and surrounding developments. Speak to real estate agents to get a feel for how much value you’re really adding.
The last thing you need is for your planned renovations to cost more than they add to the value of the property. Yes, building a replica of Shuri’s Black Panther lab sounds amazing, but it may cost more than your equity can bear.
8 – Keep one eye on the future.
Be smart about your reno. With all the effort you’re putting in, you have to love it, but think about the future, too. One day you’ll sell this house. How can you maximise your return?
Research by Finder looked at what buyers really want to pay for. Top of the list are air-conditioning (65% of respondents) and a carport or garage (60%). Know your area. If it’s popular with families, think about how much land you might leave for a garden. If you’re in an urban area, what features will be popular for entertaining?
It can feel strange to think about selling before you’ve even started renovating, but you’ll be glad you did.
9 - Shop around.
Give tunnel vision a miss. The first house you see might be The One, but compare it to others first. Look at plenty of other homes in your price range. Be realistic about the benefits of buying a place you could live in right now. If you’re sure you want to renovate, view as many potential projects as you can. Each one will have something different to offer.
Listen to your heart – whether it’s butler’s pantry or open-plan living with gas fireplace – just make sure your head has its say first.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.