Renovation cost benchmarks

[serendip]

I've been looking quite a lot at renovation costs, including attempting to benchmark what you 'should' be spending on various aspects of the renovation.

This has led me to such numbers as 2% house value on the kitchen & 1.5% on the bathroom. Now here's my connundrum, probably best demonstrated by an example based on 2 markets I know reasonably well.

House 1: Frenchs Forest (Sydney), bidding from $1.1M http://www.domain.com.au/property/for-sale/house/nsw/frenchs-forest/?adid=2011817999&sp=6

House 2: Adamstown Heights (Newcastle), sold for $620K recently http://www.domain.com.au/property/sold/house/nsw/adamstown-heights/?adid=2011191507&sp=4

I've chosen these 2 as they're pretty similar houses, in areas with a similar demographic & likely to have similar expectations re finishes. So theoretically if I was going to renovate the Adamstown Heights house I would have $12K but in Frenchs Forest about $22K. As you can see, doubtless the Adamstown Heights house is going to end up with a crappier kitchen, not necessarily what the market wants.

Thoughts?

 

[MIW]

I've been looking quite a lot at renovation costs, including attempting to benchmark what you 'should' be spending on various aspects of the renovation.

This has led me to such numbers as 2% house value on the kitchen & 1.5% on the bathroom. Now here's my connundrum, probably best demonstrated by an example based on 2 markets I know reasonably well.

House 1: Frenchs Forest (Sydney), bidding from $1.1M http://www.domain.com.au/property/for-sale/house/nsw/frenchs-forest/?adid=2011817999&sp=6

House 2: Adamstown Heights (Newcastle), sold for $620K recently http://www.domain.com.au/property/sold/house/nsw/adamstown-heights/?adid=2011191507&sp=4

I've chosen these 2 as they're pretty similar houses, in areas with a similar demographic & likely to have similar expectations re finishes. So theoretically if I was going to renovate the Adamstown Heights house I would have $12K but in Frenchs Forest about $22K. As you can see, doubtless the Adamstown Heights house is going to end up with a crappier kitchen, not necessarily what the market wants.

Thoughts?

If let's say you spend 10% on cosmetic renovations than your assumptions are incorrect in $ terms.
Also, different expectations for items are based on $600K property as compared for properties over $1 million.
For example it wouldn't just include updating kitchen and bathroom, but with the more expensive property rendering could add value, jigging the layout, etc....
So I stick to different strategies for different valued properties, also checking what demographic is buying if you plan to sell and what they are after. So your property, the product, should cater for at least 90% of people, the consumers/purchasers. Think as providing a product for that particular market!

 

[D.T.]

Don't use percentages, use real numbers based on the cost of local products and local labor.

Eg I know I can get a 3k kitchen in Adelaide but not in Perth.

 

[Shahin_Afarin]

That agent from the Adamstown property looks like Dr Brown from Back to the Future.

 

[vaughan]

Don't use percentages, use real numbers based on the cost of local products and local labor.

^^^This.

There are no percentage guides that work. They sound good, authoritative, confident, but they are lazy.

Estimate the cost to do the work, estimate the value added (either equity, or real increase in rent, etc) then calculate the return on investment.

 

[serendip]

Thanks all. You have confirmed what I was thinking. The benchmarks I've seen so far seem to be based on a particular market and cannot necessarily be applied across markets. I guess the benefit of developing them for your own purposes & market/s is to enable quick feasibility analysis as a starting point.