Now before you freak out and turn off, I’m not talking about replacing your kitchen or bathroom or even painting and doing the floors. I’m talking about full-blown renovations with council approvals, with big, wordy contracts from your builder, and all sorts of reports for things you’ve never even heard of.
In most cases, renovations don’t add value to your home, beyond the amount you’ve spent on getting the job done.
I know, I know, this can’t be true as I’ve watched people all the time do it on TV! Hmmmmmm When you bought the place, the location, size, proximity to school zones, but most importantly, the potential, was already factored into the price you paid for the property – This is why, in reality, we’ve very rarely observed people making a profit on a renovation.
Normally during the renovation (which can last a couple of years!), there’s been an appreciation in the value of the land. Let’s be honest, it’s the land that your home sits on, where the value is – and in a rising market, often the renovators take credit for the work the dirt does on its own. The dwelling’s a liability!
Now, this isn’t likely sitting well with you I know – there’s an entire industry devoted to home improvements complete with reality TV shows, and I can’t compete with the entertainment value of that or even the influence they have over your belief’s here.
Here’s where we have to get real though – this involves a lot of money and could dramatically affect where you end up in retirement. Unless you’re keen for some pain and stress (not just on yourself but with your partner), think twice about doing a big renovation.
Hear me now and believe me later if you prefer – it will cost twice as much and take twice as long compared to what you’re already thinking. Coming from someone who makes money by selling money to people to do expensive renovations – I’m telling you straight, the maths around renovations are crooked!
Go on, give your real estate agent a call – it may just be the smartest thing to do here!