Budget guidelines for reno ??
- Thread starter Elke
- Start date
Cherie Barber often doubles the size of a home so it is unrecognisable from the original. She spends HUGE money so gets huge profits. For smaller type reno's of course the gain isn't nearly as dramatic.
There are lots of % type statements but at the end of the day you want to have your property increase in value by more than you spend. You can blow this easily by putting high end fittings in a low end property. The main mistake people make when renovating is underestimating costs and time and over estimating finished price.
If I was getting tradies to do all the work I would want $2 increase for every $1 I spend.
When doing physical work myself I want $3 increase for every $1 I spend.
We typically spend $15K on a 5 week reno (that's new kitchen, bathroom, paint, flooring). So a typical one. Buy $210K + $15K reno = $225K spend. New value $270K. So to buy and sell there wouldn't be a huge profit (but not bad for 5 weeks work). But for us it gives instant equity and the yield is high meaning it is CF neutral at worst. Some are CF+ from day one.
There are lots of % type statements but at the end of the day you want to have your property increase in value by more than you spend. You can blow this easily by putting high end fittings in a low end property. The main mistake people make when renovating is underestimating costs and time and over estimating finished price.
If I was getting tradies to do all the work I would want $2 increase for every $1 I spend.
When doing physical work myself I want $3 increase for every $1 I spend.
We typically spend $15K on a 5 week reno (that's new kitchen, bathroom, paint, flooring). So a typical one. Buy $210K + $15K reno = $225K spend. New value $270K. So to buy and sell there wouldn't be a huge profit (but not bad for 5 weeks work). But for us it gives instant equity and the yield is high meaning it is CF neutral at worst. Some are CF+ from day one.
I usually don't follow the ratio rules
For me it's all about equity , and then %/ratios
I'm spending 55k on a Reno at the moment, and no way will I get 3x or 5x back in equity
More like 90k
For me it's all about equity , and then %/ratios
I'm spending 55k on a Reno at the moment, and no way will I get 3x or 5x back in equity
More like 90k
On top,
I also would accept very small equity increase if the area is about to boom or the growth long term would be good
