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How to Avoid Over Capitalising on Your Melbourne Home Renovation
Deciding just how much value to place on your home renovation requires a little homework plus taking a good look at the area of Melbourne where your home resides. Here are a few pointers in the right direction to help you avoid over-capitalising on your Melbourne home renovation.
Price point: As a general rule, the more a property is worth, the lower the risk of over-capitalising. This means homeowners with a $350K property have to be fairly conservative in their home renovations compared to those with properties with a price tag exceeding $1M. Theres a multiplier effect that comes into play here - as the property value increases so does the value you can place on your home renovation budget.
Second best: A good way to avoid over-capitalising on your home renovation it is to renovate to not be the best house in your Melbourne street, but to land somewhere between average and the second best house. This way your home renovation is delivering what buyers expect from a house in your area, but not overdoing it. If your home renovation leaves your property with a less-than-average update compared to other houses in the street, then youre under-capitalising.
Do your homework: Take a good look around your Melbourne suburb, and at streets close by in particular, to see what other homes offer. Take note of the modern features and home renovations these houses may have undergone. If other homes in your neighbourhood have high-end kitchens (or modern bathrooms, expensive carpets or lavish pools) then its a safe bet that you wont over-capitalise on your home renovation. However, if you have a budget kitchen while all other homes nearby have luxury kitchens, future buyers will assume they need to replace the kitchen if they were to buy your property. Its about striking a middle ground. Renovating too cheaply in a middle-class home will drag down the value of your home and also means youre living with a less comfortable kitchen while you own the property.
Potential buyers: Notice who is buying into your Melbourne suburb. What lifestyle do they aspire to? What could be their needs and expectations when buying a home? If your home renovation is to a standard these potential buyers aspire to, youll be heading in the right direction.
Now selling: When doing your homework, consider comparable sales what properties are on the market now and selling well, and what do these properties offer? If your home renovation replicates what theyre offering, you should avoid over-capitalising.
Expert advice: Seek professional advice for inspiration and knowledge about what works best in your home, how to make the most of your homes layout and how to best create new modern spaces without over-capitalising.
- For more advice on how to create your Melbourne home renovation, see www.themakeovergroup.com.au, try our Online Renovation Costs Calculator or phone The Makeover Group on 1300 768 464.
Richard Armstrong is a Director of Melbourne firm The Makeover Group. He has more than a decade of property styling and home renovation experience, including kitchen and bathroom design and build. He has helped hundreds of Melbourne clients create home renovations that enhance their homes value without over-capitalising.