Renovations & increase in value....experiences and outcomes...

I am in the process of updating a 3br Edwardian BV property and I have estimated cost of the update which is predominantly cosmetic. The cost is probably going to be in the vicinity of $77k and should take approximately 2 months to complete. The increase in valuation is based on some REA feedback to me of around $150k.

I would be interested to hear any recent stories where you have spent $x and increased your valuation by $x+. I would be interested to see how this potential increase compares to your experiences and whether it is worth pursuing this option. Is there a rule of thumb for what a renovation should add to value eg $1 renovation = $1.2 increase in valuation?

There's no rule of thumb; you can guestimate if you think it will help, but at the end of the day, the best indicator is what the finished product of similar properties in the immediate area have sold for in the last 3 months.

If you have a budget of $77k, and you think it will return an extra $150k in value, then this is good, don't go on the agent's say-so. Do your own research on the area.

Also, renos are sneaky; they can take twice as long and 50% dollars more than you think.

L.AAussie said:

Also, renos are sneaky; they can take twice as long and 50% dollars more than you think.

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I hear that! This very minor update was initially going to be $20k..$77k is now a worse case (with $10k buffer), albeit the scope of works has increased substantially from what I was originally planning to do.


The reason I am looking at REA feedback, not only from comparables, is that equivalent renovated properties are selling in the area for approximately $250k-$300k ($850-900k) more than I purchased. The difference being that I am right near the train line. Although the line is in a cut away ie sunken, so it is not at eye level. So I know that reduces the value, just not sure to what level. The properties on either side have not sold recently except a 2br renovated Victorian cottage (5 yr old reno) which the way the road dog-legs, is not across from the rail line. It sold for $740k.

I intend to speak to a valuer and try and get a more insight from them...

I read somewhere that every $1 for a reno should add $2 to the value. If tis less than that, then one is over-capitalising the property. Just having spent $100K on the PPOR has increased the value (according to the local REA) by $260K, so v happy with that.

Last month finished a reno on an IP unit...spent $6K, increased value by $15K, so not complaining there either.

Hi buzzlightyear,

I too would be aiming to at least double your money. So for every $1 spent, you would want $2 in return.

What are you plans with this property? Is it a rental or for re-sale? Where in Melbourne is it located? Being a period home I don't think you can go too wrong as they will always be in high demand. It comes down to your end goal as to whether it is worth it.

I recently finished renovating a property which increased its value by about $150k. I only spent $8k but did most of the work myself over a period of 6 months. Although a lot of the growth was due to the inner-Melbourne boom which increased its value by about 30%.

Ozi

ozi said:

Hi buzzlightyear,

I too would be aiming to at least double your money. So for every $1 spent, you would want $2 in return.

What are you plans with this property? Is it a rental or for re-sale? Where in Melbourne is it located? Being a period home I don't think you can go too wrong as they will always be in high demand. It comes down to your end goal as to whether it is worth it.

I recently finished renovating a property which increased its value by about $150k. I only spent $8k but did most of the work myself over a period of 6 months. Although a lot of the growth was due to the inner-Melbourne boom which increased its value by about 30%.

Ozi

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I have a new found respect for those people skilled enough who can do much of their own handy work. Might be a new goal for me to 'get' handy!

The property is a definite long-term hold located in Windsor.

Hi buzzlightyear,

I only did the work myself because:

a) It was my first reno, I thought it would be fun and great experience (which it was).

b) I used the FHOG to purchase, so couldn't rent out the property for the first 6 months anyway.

c) I had spare time on the weekends.

If I was to do it again, I would definitely pay someone to do the work Its not easy, especially when you work full-time already.

Long term buy and hold in Windsor, you should do very well

Ozi

Hi buzzlightyear

Having worked as a tiler specializing in tessellated floor tiling & English reproduction wall tiling it was amazing to see how much money people throw into renos, upgrades and total reverbs on period homes.

IFF YOU WANT TO GET THE BEST RETURNE FOR YOUR $, REPRODUCE THE PERIOD OF THE DWELLING AS CLOSE AS YOU CAN.

Edwardian property's so restored are always in great demand.

Gerd

gerd. said:

Hi buzzlightyear

Having worked as a tiler specializing in tessellated floor tiling & English reproduction wall tiling it was amazing to see how much money people throw into renos, upgrades and total reverbs on period homes.

IFF YOU WANT TO GET THE BEST RETURNE FOR YOUR $, REPRODUCE THE PERIOD OF THE DWELLING AS CLOSE AS YOU CAN.

Edwardian property's so restored are always in great demand.

Gerd

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Gerd, agree totally with your sentiments on the restoration. The bedrooms and formal living/dining area, is being effectively restored, so opening fireplaces which had been plastered over, polished floor boards, period lighting. The property does have cornices in the hallway up until archway but not beyond it. The second bedroom has no cornices but a picture rail and the third bedroom has neither. So this is something that I will be putting in. The kitchen, bathroom and living areas however will be modern.

You wouldn't know of a good place to purchase period doors (front) with leadlighting?

buzzlightyear said:

Is there a rule of thumb for what a renovation should add to value eg $1 renovation = $1.2 increase in valuation?

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Hi Buzz,

Yes like the others have said for each $1.00 you spend you'd be looking for $1.50 - $2.00 increase in valuation. Most experienced can get the $2.00 but they often neglect to cost their own time in the equation.

All the best with the reno.

Aimy

buzzlightyear said:

Gerd, agree totally with your sentiments on the restoration. The bedrooms and formal living/dining area, is being effectively restored, so opening fireplaces which had been plastered over, polished floor boards, period lighting. The property does have cornices in the hallway up until archway but not beyond it. The second bedroom has no cornices but a picture rail and the third bedroom has neither. So this is something that I will be putting in. The kitchen, bathroom and living areas however will be modern.

You wouldn't know of a good place to purchase period doors (front) with leadlighting?

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Stolts?? or scholtz in Collingwood has everything you could every want. I needed some pressed metal for an old edwardian ceiling i owned and they had the same pattern, in fact they had 15 different paterns available. There was an old recycle place in swan st richmond that has all original old vic and edwardian gear but im not sure if they have closed now. Love old houses but will never own another, well maybe just one more
pieman

Hiya Buzz

Is 77 grand a lot for a cosmetic makeover? Visit the reno kings site, they have bunch of ideads and seminars to help you keep the costs down
http://renos.com.au/

dags