Renowait and see: why a slower market could be ideal for renovating

A stable economy, easier access to online know-how and even too many seasons of The Block have all contributed to Australia’s thriving renovating culture. However, there can also be downsides to upgrading.

There’s another factor that’s causing Australians to renovate in record numbers. Home dwellers are using a slowing market as an opportunity to wait and renovate – and refine the place they’re in – since they might be there for a while.

We spoke to two recent renovators – one a success story, the other a distress story – about their motives, what they’d do again (and what they’d never do again), as well as the single biggest piece of advice they would give anyone about to invest in an episode of home improvement.

That piece of advice is the one common link in both renovating stories – do your research, make a plan and most importantly, stick to it.

House of horrors.

Buying off the plan became an emergency plan B for newly engaged couple Cam and Steven, when they were forced to renovate poorly waterproofed balcony. “This was not a renovation by choice. Almost the whole apartment had water damage and the floor boards were cupped,” the couple said.

Turning obstacle into opportunity, Cam decided to do a kitchen renovation as well and turn what was supposed to be an investment property into a home with his stamp on it.

Cam’s insurance covered the cost of the floorboards, with an extra $20,000 budgeted towards increasing the value of the unique, two-floor cathedral-ceilinged apartment in Prahran. “I went in thinking I’d spend $20,000 of my own money, so you can imagine my surprise when I got a bill for $50,000 at the end.”

So how did this happen?

“We had builder and developer issues from day one. The developer kept dragging their feet, and the premium kept rising because the builder needed to fix a leak that they couldn’t access.”

But that was just the start of the wallet haemorrhage. Like many first-time renovators, Cam was new to a lot of this, and expected his builder to also be his financial planner.

“We’d go to pick out bench tops – with no prices on anything. Insurance only covered certain surfaces and the builder never said no due to budgeting issues, or that things were going up 10 or 20%. It was probably me being naïve, but if I did it again I’d be very stringent about what’s costed in the quote.”

Time budgeting turned out to be as much of an issue as the finances, with renovations taking approximately nine months longer than the original three.

The end result was somewhat positive, with Cam and Steven loving the new interior design of their apartment (and a place they can call home), which compelled them to focus on the apartment’s eventual resell value.

“I wanted clean, simple and timeless, so it doesn't matter who comes into the apartment, it will still look nice. If I sold it, someone could come in and make it their own. And I achieved that.”

A substandard renovating experience, but a stunning result nevertheless.

However, the renovating experience was tarnished by concerns of more surface leaks and a bill almost three times higher than anticipated. 

“If I did it all over again? I’d do more research on local builders with great reviews. I’d cost out exactly what was required, create a plan and stick to it. Because once you start changing your mind while renovating, it’s a domino effect.”

Bills, bills, bills:

Because the renovations were expected to only cost around $20,000, Cam decided not to borrow from the bank or find equity within the home, and instead put it on his credit card.

If you don’t know much about renovations, or the finances attached to them, it’s recommended you seek professional advice on your project, as well as consult a financial planner. 

Adding a story of success.

For Courtney and Sam, the exciting addition of a new family member meant that a house renovation was not only necessary, but also time critical.

Their 1920s home decor was well overdue for a makeover, which ended up including a new living room, powder room, bathroom, laundry – as well as another floor with two bedrooms and a bathroom. Clearly this was just the first of a few exciting additions.

Courtney also took the opportunity to landscape the garden, add a garage and alter the front façade.

A big win on home turf for Courtney and Sam.

With all that work, you have to wonder: would it have been easier to just to buy another home?

“We weighed up the cost of moving and the chances of buying a new home with the same character – and we believed it was cheaper to renovate. Plus, we loved our quiet dead-end street.”

Because time was limited with a new baby on the way, Courtney and Sam decided to do all the rooms at once. They stripped the house back to its bare bones so there were no nasty surprises along the way.

The couple were also quite strategic about retaining the best qualities of the house for potential resell value. “We wanted to keep old features like the traditional wooden floors, skirting and doors. We also wanted to make sure it was neutral.”

Despite neither of them having prior knowledge of or experience with house renovations, Courtney managed to turn her passion into a secret weapon. “I love looking at houses on domain.com.au and realestate.com.au, as they’re usually looking their best for sale. I would also attend open houses to look at them in real life, because pictures don’t always tell you the story.”

Nothing kitschy about Courtney and Sam's bright, timeless kitchen.

The project wasn’t without its hiccups though, which could’ve been far worse if the couple hadn’t done their research and made the best of the lost time.

“We needed to remove a big tree out the back, which took two full years to get council approval. So we used this time to engage with an architect to create plans and have them submitted to council.”

Apart from the backyard tree’s refusal to vacate, Courtney and Sam’s renovation story has significantly increased their home’s value, with an estimated increase of $600,000 in value to the home off the back of a $310,000 renovation. Plus, renovating has accommodated space for a new baby (or three) and turned their already charming home into an even better version of its former self – all put down to a simple strategy.

“Stick to your guns. If you have your heart set on something, don’t compromise. You will regret it later.”

The bottom line.

Knowing that the renovation was massive and that the house was being rebuilt almost from scratch, Courtney and Sam needed access to big funds. Fortunately, there was a lot of value within their home equity – which funded the entire project.

To gauge your borrowing power and your home’s equity, get in touch with your broker.

A final word.

With a slowing property market, accessing equity from your home to fund renovations that add value could be more difficult (as a decreasing home value limits your borrowing power).

However, you could have a few options at your disposal for financing your renovating – just be sure to keep within your budget as best you can and pocket the best piece of advice from both couples: stick to your plan.