It’s a well-known fact that bathrooms and kitchens offer some of the biggest opportunities to add value to your home or investment property. But if you had to choose between upgrading one or the other, which would give you more bang for your buck?
The answer, according to renovations expert Ana Stankovic from www.renovateandprofit.com, may surprise you.
“Most people will look to renovate a kitchen within a home, but you should be careful with how much you spend on a kitchen renovation,” Stankovic says.
“On average, in Australia, renovating an existing kitchen is only the fourth or fifth add-value technique, depending on suburb.”
Importantly, she adds that investors must note that in different suburbs – and in different types of homes within those suburbs – there will be a specific order of which renovations are going to add the most to your profit line.
“Let's have a look at a family house in Mount Waverley, for example. In this area, renovating an existing kitchen is going to be the fifth highest-returning renovation that you can do, and even that is going to have specific design and functionality requirements you need to adhere to in order to create a profitable result,” Stankovic says.
“However, if you wanted to add significant value, you might look at adding a second bathroom. In this particular suburb, doing so will add much more in value compared to how much it costs, rather than renovating the existing kitchen.”
So how do you figure out which area of the property to makeover in your own situation?
The answer, Stankovic says, is to do your research and be strategic. “Because the property market is currently a bit flat, guesswork and complexities need to be reduced as much as possible, and you need to follow a detailed and strategic approach to everything you do with your renovation in order to guarantee success,” she says.
Stankovic’s top 5 tips include:
- Be choosey. “You need to be very selective in what renovation project you purchase, in order to get one that is going to have the highest profitability potential.”
- Be thorough. “Do thorough research into the home and suburb, including what is going to add the most value.”
- Be strategic. “Prioritise all of the changes and upgrades in order of what will provide highest yields.” You may want to speak to local property managers to get a short-list of the most sought after features with tenants.
- Be budget-conscious: “Cost out your renovation in detail and accurately, and calculate how much potential profit is in the project. Let that drive the purchase negotiations.”
- Be organised. “Plan and organise in detail and be careful about the order you perform your renovations, being mindful of minimising your holding costs.”
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