Everyone loves a renovator’s delight, but how often do they turn into a renovator’s ruin?
Far more often than you’d imagine, says Belinda Botzolis, valuer and senior property strategist at Metropole Property.
Because while it can be good fun with an investment property to pull out a rickety old kitchen and replace it with acres of gleaming marble, and to transform a grotty bathroom into a dazzling white spa, many amateurs discover that they’ve spent far more than they could ever recoup.
“It’s easy to get carried away and overcapitalise on an investment property,” Botzolis says.
“A lot of the time, I blame social media like Instagram and then the beautiful pictures in home magazines. People want to emulate the images and, too late, they discover that those tiles are handmade imported porcelain and cost $130 a square metre.
“People can just get caught up in the beauty of renovations rather than thinking about what they want to achieve. Every dollar you spend, you want to get at least $2 back, otherwise there’s no point. Of course, you want to attract good tenants and maybe sell later for a higher price, but if your property is in an area where people are happy with Laminex, why would you choose Carrara marble?”
Australians are still in the midst of a pandemic renovation frenzy, with $11.82 billion worth of renovation approvals granted last year.
But while the lack of international travel means many of us have more spare cash than ever before to splurge on renovations, it’s important, with an investment house or apartment, to not go too far.
In a market with rapidly rising prices, it’s even easier to overspend.
But to get the best bang for your buck, it’s wise to be more cautious, say the experts.
“In a city like Sydney, property values will still double every seven to 10 years,” says Phil Lovell of architectural builders Lawson and Lovell.
“And if you’re in an exclusive area as an owner-occupier, by the time you’ve finished your renovation, your home will have increased in value a lot.
“But with an investment property, it’s important you go with a reputable builder and be careful not to overcapitalise.”
It’s also critical not to be too avant-garde with the renovation of an investment property, warns Peter Georgiev, director of Archicentre Australia.
He was once asked to design a bathroom in a house with clear glass walls, but persuaded the owner to add some etchings to the glass to avoid everyone outside seeing everything.
Another notable trend to avoid, he advises, is having a bathroom in a bedroom.
“But real estate prices generally are going up so much, and rents are so healthy, that whatever you spend, eventually the marketplace will give it back to you,” Georgiev says.
“And if you go into debt to renovate, now is a good time with such low interest rates.
“But generally, with an investment, you just want to create something that’s nice and clean and neat.”
That also means something that’s not too in vogue, which will date easily, agrees Botzolis.
“If you’re spending a lot, go more for something Grace Kelly and rather less the Kardashians,” she says. “You want it to age well so you can follow the money, rather than the latest trend.”