How to increase the value of your property without a major renovation
The uncertainty of the housing market pushing values down and historically low interest rates on offer means it's time to start thinking about how you can increase the value of your property without spending the big bucks, especially when refinancing.
More than 90 per cent of Australian household debt is spent on building wealth or buying a home to live in rather than purchasing consumables. According to the ABS, Mortgage debt on owner-occupier housing represents the lion’s share of Australian household liabilities at 56.3 per cent while debt associated with investments (such as rental properties or shares) makes up 36.5 per cent
With many real estate forecasters estimating that economic uncertainty will make for an uncertain housing market, with prices expected to fall 12.5 percent on average, according to NAB, it's a good time to look at increasing the value of your largest asset.
Whether you're looking for some DIY fixes to occupy your time or want to get maximum bang for your buck when selling or refinancing, we've got advice on the best ways to increase your home's value without spending 100’s of thousands of dollars.
When it comes to improvements, less is usually more
When it comes to real estate return on investment, less is more. If you do a major renovation of your kitchen shortly before selling, you're never going to make that money back. But a smart, cosmetic makeover is guaranteed to pay for itself, and then some.
The rule of thumb on kitchen renos is that they should cost five to 15% of the home's total value.
So, let's say your home is worth $600,000 — you're looking at spending between $30,000 and $90,000 on the kitchen renovation. But if you think you might be selling in the next few years, you want the budget on any kitchen project to be much closer to $30,000.
Even spending as little as $5,000 on a small-scale touch up — say, updated appliances, an inexpensive new countertop, and freshly painted cabinets and walls — could raise the home's sale price by up to 5%. In that scenario, you're spending $5,000 to make an extra $30,000. And if the upgrades help the home sell faster, there's added savings there.
A little change goes a long way, but homeowners need to be realistic about their DIY skills — minor repairs that started as DIY, commonly get completed by a professional.
Firstly, paint your front door! A glossy coat of exterior paint can amp up your home's kerb appeal — but you'll want to be strategic about the colour you select.
Clever use of space is key, especially now
Decks aren't just for barbecues anymore. With the right furnishings and shade protection, it might be another spot for kids to do their homework. Or maybe there's a wellness corner with room to roll out a yoga mat or put down a meditation cushion.
The average deck build is around $200/m2, and you can do it for well under ten thousand dollars if you choose a simple design and inexpensive material, like pressure-treated lumber.
Biophilic design has become a real estate buzzword, meaning living spaces that connect occupants more closely to nature. In a working-from-home world, this is only expected to become more sought after.
Another smart strategy is to look for ways to increase the home's usable living space as an office or study room.
Make sure it passes the smell test
One of the most cost-effective but important ways to ensure your house lives up to its full value potential is to ensure that it smells as new as possible.
Buyers' senses are heightened when it involves spending a large amount of money, so making sure the house smells as good as it looks is important.
We often don't notice slight odours in our homes — and that this is especially important in houses with pets.
Make sure you get your aircon vents, rugs, and floors professionally cleaned and use air fresheners if necessary, to neutralize odours. And consider recruiting an honest friend to play the role of a potential buyer and do a sniff test for you.
When in doubt, storage is king for small spaces
Decluttering and using pops of colour are extremely important to make smaller spaces feel inviting.
When it comes time to show your home to potential buyers, create as much light as possible by keeping window coverings open. Consider getting a storage unit to hide away larger items and keep things simple.
This is less about providing a ton of storage for potential buyers — though that is important — but more about establishing an organized atmosphere. You don't need to fill every open spot with cabinets and shelving, but there are probably a few simple additions you can make that will tie a room together, best place to start your project is in the kitchen.
Regularly inspect your home to avoid losing value
While you're busy improving your home's worth, it's important to ensure that you're not losing any value that will offset your gains.
If you're looking to sell or have your home is going to be valued by a lender when you apply to refinance, the first thing that needs to happen is a thorough inspection.
If unwanted surprises are uncovered — such as mould or water damage — this will cost time and money, especially when selling as the buyer will use it as a bargaining chip to reduce their offer.
Home owners can avoid this problem by inspecting their house regularly, focusing on key hot spots where damage is likely to arise, areas to check are your ceiling cavity, roof, sub-floor, and bathrooms.
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This article via BI does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.