As the real estate boom starts to lose momentum, property owners are considering home renovations in order to improve their homes and increase their equity.
Many who invested during the boom invested in undercapitalised property with the intention to renovate and capitalise. As the appetite for real estate renovation increases, it’s important to consider the type of property you’re renovating. Renovating your home and renovating an investment property are two very different things.
Renovating your home is a somewhat emotional and comfort-based project, whereas renovating your investment property needs to be purely about financial return.
When looking into a renovation project, the very first question you should ask is: who is this renovation for?
Here are some important points to consider when renovating your home vs renovating an investment property.
When you’re renovating your home, you are the demographic—especially if you’re planning to live in it for years to come. Sure, you might consider which rooms of the house are the best to renovate for future home value, but you’re likely renovating to make your home more appealing and comfortable for you.
When you’re renovating an investment property, your demographic is who you expect to buy the home when the renovation is finished. You’ll figure out your target market—in a sense—and then work backwards. What would impress them? What is your end goal? Are potential buyers looking for modern countertops or new fixtures?
Not all renovation projects for investment properties are inexpensive ones. Those investors targeting high-end buyers know they’ll have to add some high-end fixtures and finishes if they’re going to attract the right buyer at the right price.
Quality and Style
Once you understand the demographic, you’ll be able to hash out the quality you’re aiming for and what you’ll be spending. You’ll also be able to figure out how to successfully budget for your renovation.
If you’re renovating your home and you are the demographic, now is the time to get the high quality finishes and design you’ve always wanted. When it’s your home, you’ll likely indulge yourself in your personal tastes and preferences, and if something is more lavish than originally anticipated, you’re more likely to go over budget for it. If there is a chance you may sell your home in the foreseeable future, you might want to consider picking finishes that would perhaps fit the taste of your anticipated buyer demographic.
When you’re renovating an investment property, you always have to be mindful of the bottom line. With every improvement, you’ll want to know how much you gain per dollar spent.
Time, Time, Time
When you’re renovating your home, you may extend the project for as long as you like or schedule it to be a quick job.
When you’re renovating an investment property, time is money. The longer your house is delayed from being listed, the longer you’ll have to pay the mortgage payments.
For an investment property, the crew might arrive bright and early at 7a.m., whereas if people were in your own home every day that early, you might be drained and overwhelmed by the project pretty quickly.
When You Should Renovate
When you’re renovating an investment property, it’s a strategic decision and you have to be mindful of the ramifications. Do you have a tenant in the property now? Are you paying the mortgage and planning to sell without renting it for a period? You’ll need to consider when the best time is to renovate based on how it might impact your return on investment.
When you’re renovating your home, the decision of when to renovate is up to you. You might want to wait until your schedule clears up or you may choose to renovate in the summer months. It’s entirely up to you, and you don’t have a large weight surrounding the financial considerations of when to renovate.
If you are renovating an investment property, here are five projects that will give you some bang for your buck:
- A cosmetic refresh of your kitchen (resurfacing, tile paint, or laminate paint)
- Updating your bathroom (paint and change out the shower screen to clear glass)
- Internal and external paint
- Update flooring (tear out old carpet or polish floors)
- Change window coverings ( replace old curtains by adding plantation shutters or white venetians)
Do you have any upcoming renovation projects in mind? Are you planning on renovating your home or an investment property?
If you have questions about how renovating a home might impact your property value or are interested in buying or selling a home, contact us to speak to a qualified real estate agent. We’d be happy to offer advice.
You can also check out our blog for more helpful tips and information.