Are you wondering how much fixing up one room could add to your home’s value? Obviously, fixing up a kitchen is a way bigger project than making over the master bedroom, with different costs involved and different amounts added to your bottom line.
In this blog post, we look at what renovations or improvements you should do to some of the key rooms in the home and what return on investment you can expect.
The kitchen is the classic go-to room
Historically, a kitchen renovation is a go-to task to add value to your home. However, it is also one of the most expensive undertakings. According to a recent Improvenet research, the average cost of a kitchen remodel is a little over $22,000 in Australian dollars. Given that the rule of thumb is you shouldn’t spend more than 5 per cent of your home’s value on renovations, this should be within reach of many homeowners.
Moreover, the work that needs doing will vary from home to home. For example, a basic IKEA kitchen setup for small areas can cost as little as a few hundred dollars if you replace cabinet fronts and splashbacks. Budget full kitchen kits can also be found for less than $5,000.
But for a complete do-over, you will be looking at spending at least $10,000 to $25,000 for simple kitchens. It can even cost up to $75,000 for a true luxury do-over. This includes everything: flooring, walls, countertops, sinks, plumbing, appliances and lighting.
While this might seem extensive, if it is within your budget, it can be very much worth it. When well done, a kitchen renovation can potentially generate a fantastic return on investment when the time comes to sell. Moreover, some vendors like IKEA provide guarantees that last up to 25 years, ensuring peace of mind for the buyers that it will last.
Make sure it stays with the theme of the home, though. For example, an ultra-modern kitchen in an older cottage could ruin the home’s aesthetic and put people off.
Bulking up the bathroom
The same principles as the kitchen apply here. A renovation can be pretty basic and cheap, but it all depends on how much luxury you want to add. According to HGTV, it is possible to renovate a bathroom for $100 per square metre. For small areas, that can mean less than $5,000 without heavy customisation.
Brian Johnson from Collaborative Design Architects also told HGTV that you should always add a 30 per cent allowance to your budget, as sometimes things go awry, and costs can blow out. If you choose to add a new toilet, bath or shower, renovating the bathroom can become expensive, up to tens of thousands of dollars.
And as for returns? Gary Caulfield from Construction Cost Consultants told Westpac NZ that bathrooms can offer a return of up to $1.50 for every dollar spent on it. Gauge the suburb and your potential buyers to know if they would want luxury or practicality? Working this out with an agent and a professional remodeler can always be a good idea.
Adding a new bedroom
Found yourself in the enviable position of having two lounges, or perhaps a basement or attic that could be converted into a new bedroom? You might just have hit a goldmine. Mr Caulfield also told Westpac that you can double your return when you turn a three-bedroom home into a four-bedroom one.
But what about the cost? In a recent Domain article, it was estimated that adding a 20 square metre bedroom would cost anywhere between $50,000 and $70,000. This will be significantly less if you already have space in your house. Graeme Bell from GDB architecture converted a loft into a room for a mere $10,000.
However, you are unlikely to get such a cheap renovation going unless you are an architect yourself, but it shows how it can be done on a small budget. Given the rising real estate prices in many of our cities, you could be in for significant profits too.
According to Real Estate Institute of Victoria figures, four-bedroom homes in certain suburbs have recently been the largest capital gains earners in Melbourne. Making your home join this category through renovation could be profitable indeed.
Don’t go overboard
Crucially though, you have to keep a cool head. Engage professionals for quotes, and get a set budget from several different firms – if they vary wildly, you need to be careful you’re not getting ripped off. On top of this, make it comfortable! If you don’t enjoy using these rooms while you live there, how can you be sure potential buyers will?
So no flashy colours or experimental designs. Keep it beautiful and functional for solid value-adding.
By Riley Howe
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