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Are you overcapitalising on your renovation?

February 9, 2016 Leave a Comment

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Nowadays in Australia, property does not come cheap and there are so many people out there who have a great strategy of buying property that needs some work. They imagine they can complete small or large renovations to increase the value of their investment and either hold or pull out their equity to continue on with their property portfolio.

17 external silk home

This is a great strategy in the right circumstances and many people do it so well, but there is a large proportion of people that get caught in the overcapitalisation trap. Even when they purchased the property at a great price, they have overcapitalised during the renovation process and hence minimised their chance of leveraging their investment as much as they had hoped.

First of all, let’s all get on the same page with what overcapitalising isโ€ฆ it means, in short,ย to improve a property beyond its resale value. So here are my top tips to make sure you avoid this pitfall when renovating.

Tip 1 โ€“

Get an independent valuation. The value of a property can vary from when you bought the property and it is also very important to get a completely independent value before you look at how much you are going to be investing into the renovation. Potential buyers and valuers will also be looking at these types of figures so it is essential that you start your planning from a good baseline.

Tip 2 โ€“

Consider your market, what are they willing to pay? Whether you are looking to have the property re-valued, leased or on sold, you need to look at what the market is willing to pay in your area and for your property type. Many properties have a ceiling on prices of sorts and it is essential that you consider this when planning your renovations. For example, if you spend $4-to-5k on amazing stone benchtops, are you in the market or area that is willing to pay for that? What will this inclusion do to your budget and hence the bottom line of what the property owes you at the end of the project? If this pushes you over your resale value, forget about it.

Tip 3 โ€“

Ensure you include in your budget a healthy buffer for โ€œunexpectedโ€ items. This being said, it is essential to have a detailed and live document that contains your budget. It can be very easy during the renovation process to say โ€œyesโ€ to small increases in the budget — $250 here and $500 there — so make sure that your budget stays live and is updated daily to allow you to look at how you are tracking and if necessary, try and identify areas that you can pull back on.

It is important to mention that avoiding overcapitalising on a property is not just about sticking to budget, it also about planning well, being realistic and removing any rose-coloured romantic glasses you might (or might not) be wearing in regard to the property value at each stage of the project.

Starting with these three things is a great way to give yourself the best chance at not only staying on track but also avoiding spending more that the market will pay, leaving you with some tough choices.

—Naomi Findlay is one of our resident experts, principal of Silk Home and founder of the International Institute of Home Staging. Want to be a home stager? Attend the 2016 Home Staging Symposium in Sydney this June!

Ask Naomi a question | Read all her articles for Reno Addict.

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The renovation of this 80s beach shack @camillo_ho The renovation of this 80s beach shack @camillo_house is a work of art and while almost every surface was updated, the decision to keep the original slate floor was genius if you ask us. 

Owner @clarehillier__ says: "With its purple, pink, red and brown tones, the slate was the starting point for our interior palette."

Come and check out the before and afters via link in bio now and read the reno story. It's a real beauty.

And you can book it for your next holiday too!

Blair Smith Architecture @kateshanasy

#slatefloor #slatefloors #80shouse #80sbeauty #camillohouse #interiorsblog #interiorsblogger #interiorsaddict #theinteriorsaddict #jenbishop #realreno #holidayhousesofinstagram #morningtonpeninsulahomes #morningtonpeninsula #morningtonpeninsulasmallbusiness #blairgowrie #blairgowriebeach #airbnbstyle
Me and my boys ๐Ÿ’— Me and my boys ๐Ÿ’—
Just a couple of dorks who've been friends for thr Just a couple of dorks who've been friends for three decades going out for a child-free dinner ๐Ÿ’“๐Ÿ˜
Excuse me while I die of a cute attack ๐Ÿฅฐ @damia Excuse me while I die of a cute attack ๐Ÿฅฐ @damianfrancis 

This doesn't happen often these days!
Hello friends! Just thought I'd say hi. Two weeks Hello friends! Just thought I'd say hi. Two weeks since leaving hospital and I'm doing much better than I expected to be at this early stage. A long recovery road ahead but making progress in how much I can move my arm and although I drag myself through some days non-stop yawning, others I can go for a little walk or out for lunch before collapsing on the couch! I can now tie my own hair back and put on a real bra which is very exciting ๐Ÿคฃ Having my bestie here to help us with the boys, drive me places and just be brilliant positive company is the best thing I could have asked for not to mention the many Dinner Ladies vouchers from friends! Thanks for all your kind messages, cards, flowers, gifts and offers of help โค๏ธ
I definitely feel like a statistic now but hoping I definitely feel like a statistic now but hoping to raise some awareness off the back of my misfortune (and also very lucky escape).

@newsouthwaleshealth have just put out this warning about a rise in serious bacterial infections. iGAS (invasive group A streptococcus) is what caused my necrotising fasciitis and sepsis.

Apparently there's similar happening in VIC too.

It's extremely rare but very serious nonetheless so please have a read and be aware of symptoms. I've linked to the article from a button via my link in bio.

#interiorsaddict #jenbishop #necrotisingfasciitis #groupastrep #groupastreptococcus #sepsis
While new technologies continue to shape the inter While new technologies continue to shape the interior design scene, one that has been getting a fair bit of traction of late isย marble-look porcelain. A cheaper alternative to natural stone, the latest printed porcelain tile technology makes it difficult to distinguish from the real thing.

Founded by husband and wife duo Anton and Rita Bourtsev, Sydneyโ€™s @kaolintiles has a unique offering in this space with over 100 different marble-look tile designs in small and large formats.

More via link in bio now.

#porcelain #porcelaintile #porcelaintiles #largeformattiles #largeformattile #marblelooktiles #bathroomtrends2023 #interiorsaddict #theinteriorsaddict #heartyourhome #realrenovations #goldsink #brasssink #jenbishop #kaolin #kaolintiles #interiorsblog #interiorsblogger
Promise this is the last wretched hospital photo I Promise this is the last wretched hospital photo I'll post and I hope to be home and with my lippie back on by Monday. You know it's serious when I'm lipstick free, right?!

This was about a week ago in intensive care. And although my arm is still bloody sore I'm now on a normal ward and no longer attached to any drips, drains or a catheter. I've come a long way.

This has been the most physical and mental challenge of my life but I'm through the worst. I kept my arm. The doctors saved my life.

I cannot say it enough times. If you're worried about your health, don't hang around. Things can change so quickly. 

A huge thanks to my amazing husband @damianfrancis We've had the hardest year yet and our marriage has never been stronger, even if my rings did get cut off my finger in hospital ๐Ÿ˜œ

As great of a job as he is doing at home with the kids, I cannot wait to get home now. Countdown is on to a new year and a fresh start.

And I can't say enough just how overwhelmingly grateful I am to all the medical professionals involved in my care, from the @healthdirectaus nurse who sent me to Emergency to the exceptional surgeons, doctors, nurses and support staff.

Happy New Year, everyone. Remember you never know what's around the corner and this is not a dress rehearsal!

And huge thank you for all your kindness here. Has been amazing while stuck in bed.

Xxx

For those who missed it, I was unlucky enough to get necrotising fasciitis. You'll have to Google it.
The unluckiest girl or the luckiest? Day 6 in int The unluckiest girl or the luckiest?

Day 6 in intensive care after suddenly coming down with a very serious necrotising fasciitis in my elbow on Sunday. Four operations later (with more to come) I'm out of the woods, alive and have my arm. But I won't be going home until after Christmas. Also picked up a bonus bit of pneumonia to keep things interesting.

I won't lie. This has been super super hard but I feel extremely lucky nonetheless. Have come across some exceptional surgeons, anaesthetists, doctors and nurses who have been incredibly kind at my most vulnerable as well as great at their jobs. I'm really grateful. Huge thank you to my amazing husband who is holding down the fort with the help and cooking of our wonderful friends. And to friends who check in, send love, flowers, snacks and sushi, I will never forget it.

Of course I will be sad tomorrow but my boys can visit and we will have another Christmas next month.

I'll leave you with this. Never ever ignore those health niggles. @healthdirectaus is always a great starting point.

Wishing you all a merry Christmas and will enjoy everyone else's celebrations on here with only a hint of bitterness ๐Ÿ˜‰

PS. Does this win the most unflattering photo of me ever published? I think so! No lippy for a WEEK.
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About Jen Bishop

Jen Bishop is our owner and publisher and an experienced journalist and editor. Interiors Addict has been her full-time job for more than 8 years. She is married to Damian and mum to Sebastian and Charlie.

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Comments

  1. AvatarGarden Design says

    February 15, 2016 at 11:54 am

    Really good advice, its always good to be reminded in black and white.

    Reply
  2. AvatarAlix/the builderette says

    February 15, 2016 at 12:24 pm

    So easy to get caught by this one. Unless a house is your “forever home” you need to be really, really careful about what you spend so that you will get a $ return on your investment. If you’re planning to stay there forever – then go for it.
    Thanks for a great article Naomi.

    Reply

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