How does a building designer stop you spending too much on your new build?
How Not to Over Capitalise on Your Build
‘Over capitalisation’ means improving a property beyond its resale value. In effect, it means you’ve spent far too much money building or renovating your block and when you sell you won’t recoup the money invested.
To make certain you don’t spend too much on your home to then lose money when you offer it for sale, ensure that you think about the following:
Before you Build or renovate, ask these questions:
What are my present and future needs? Space for the kids? Are they moving out soon?
How much will EVERYTHING cost, do I have the funds, how much can I borrow? Will renovations raise or lower the value?
IF RENOVATING, What is the condition of my home? Does 50 percent need work or less?
What do I want to achieve by renovating? Would it be cheaper to buy a new home?
Am I bUILDING OR renovating to sell or to live in? (This will dictate budgets, EXTENT OF work, design finishes).
Understand What Your Property is Worth
If renovating obtain a valuation by a qualified real estate agent, or two. This is so you get some understanding of what your home is worth on the market currently, how much its value has increased since you purchased it, and what other properties in your street have sold for - this is important. Ask your agent about the value of similar renovated and unrenovated houses in your area, but remember all neighbourhoods have upper sale threshold and a median sale price which can vary a lot even in one suburb because of the demographics, the style of the houses, and the streets capes.
If you have a ballpark figure of what your home is worth, you can decide how much you want or can spend on renovations, or not to spend at all. If you’re wanting to sell your home soon, or you want to renovate an investment property, the general rule of thumb is to allow 10 percent of the value of your property to be spent on renovations. But if you intend to stay in your home in the longer term, you might be able to take the risk and spend more.
Make Plans for the Future
Even if you’re building or renovating to live in your home more comfortably and to suit your present or future needs, it’s important to ensure that your design decisions will appeal to a broad range of potential buyers if you ever wanted to sell. The rooms that will add value to your home are the bathrooms, living rooms and kitchen plus the outdoor living space. Recently, making homes greener via and more energy-efficient which lowers energy costs is proving more and more popular with buyers. The downside is adding such things as swimming pools can lower the value of your home with many buyers reluctant to pay the extra expenses and the work that’s required to keep a pool in shape.
Stick to Your Budget
Ensuring you have a planned budget down on paper is important, but also, making sure you stick to it will help you to make sure you don’t overspend. If you are intending to apply for a loan, a borrowing power calculator helps estimate how much you can ask your bank for, and you don’t want to be in a position where you can’t afford to finish the work and have to sell the house half finished.
Choose the Best Design and Layout
Poor design and layout can have a negative impact on the resale of your property, so you should consult design and building experts like architects or building designers to draw up your plans. Some homes are renovated when it would have been better to demolish and build new. If your home renovation design and layout is below standard, you won’t have much of a chance of recouping your costs or getting a good price for the place when you sell.
Don’t Do it Yourself - Get a good Builder
It’s crucial to choose the right builder who is qualified, licensed, trustworthy, experienced, and skilled. Do your homework, and spend time on research to find out if a builder has the correct qualification. Talk to friends if they’ve had work done, and ask to talk to your builder’s past clients.
And don’t do the work yourself unless you’re a qualified builder or you will devalue your home. There’s no such animal as a cheap build or renovation, it shows.
Alex Morrison has worked with a range of businesses giving him an in depth understanding of many different industries including home improvement, financial support and health care. As the owner of Integral Media, he is now utilising his knowledge and experience with his rapidly increasing client portfolio to help them achieve their business goals.