How to avoid blowing your dough on a home reno

Home reno gurus Andrew Winter and Neale Whitaker share their top tips for keeping costs below budget, while adding value to your property.

When the market gets tough, the tough get number-crunching.

A cost of living crisis and interest rate hikes have led homeowners to tighten their belts when it comes to renovation budgets despite a surge in the cost of materials since Covid.

At the same time, properties in need of updating have been the most difficult to sell with buyers having little wriggle room for a post-purchase renovation.

Real estate expert and co-host of Foxtel’s Love it or List it Andrew Winter said turnkey properties were highly sought after in the current market.

Love it or list it hosts Andrew Winter (L) and Neale Whitaker (R). Picture: Foxtel

“After Covid, the renovation market became trickier to sell in,” he said.

“Buyers are so nervous of taking on any big projects because they just aren’t sure of the cost.”

It’s a challenge that features heavily in the new season five of hit Foxtel show Love It Or List It, where homeowners are faced with the difficult decision to either renovate their dated home or list it for sale.

Style guru and co-host Neale Whitaker said the cost of living crunch played a major factor in this year’s series – a stark contrast to the low interest rate climate of season four.

Neale Whitaker in front of a stunning kitchen transformation in episode 1 of LIOLI’s fifth series. Picture: Foxtel

“It was a very different landscape to the one we were filming in 2020,” Mr Whitaker said.

“The renovation projects we’re dealing with this season are very realistic, but they’re definitely more modest than we’ve had in previous seasons.”

“There were a few occasions where we couldn’t deliver everything that was on their wish list because there simply wasn’t the budget. So you’re in that situation where you do have to work out what to leave out and what to go ahead with.”

The risk of overcapitalising was a concern for Mr Winter, who said the market was “unpredictable and fairly volatile” when filming started in March.

“There was no real vision that prices were going to do anything other than probably hang in there,” he said. “Interest rates had been going up for a while, there was no sign of them abating and there was this real uncertainty – yet the market was hanging in there because of a lack of stock.”

A sneaky peek into episode 2 of LIOLI. Picture: Foxtel

He said homeowners wanting to avoid overcapitalising on a renovation in the current market should be clear on how long they intended to stay put, with most well-thought out renovations paying for themselves in added value within about three years.

Those likely to sell within a year or two would be better off doing a cost effective cosmetic makeover to improve the property’s presentation for sale.

Those staying for a couple of years should ascertain how much their property would fetch in its current state before researching how much it would sell for after being renovated. For instance, a $70,000 bathroom and kitchen upgrade would be a safer option if it brought at least the same amount in added value over the short term.

Mr Whitaker said it was crucial to be realistic.

Andrew Winter on set in the hit Foxtel show. Picture: Foxtel

“Over the years I’ve seen people who basically have no interest whatsoever in cooking or entertaining yet for some reason they want to blow tens of thousands of dollars on the latest whiz bang kitchen with all the bells and whistles because they feel they ought to have it,” he said.

“One of the most fundamental things is, are you renovating for yourself to stay living there or are you renovating for sale? If you’re renovating for sale that’s a whole different ball game.

“Under those circumstances it becomes more about the potential buyer and less about you.”

When deciding on a budget, make sure you check it more than once and have “as much fat in there as you possibly can,” he said.

“Whatever you think that renovation is going to cost you, it’s going to cost you 10 per cent more as a minimum – probably more like 20 per cent more.”

The pair had their work cut out for them in series 5. Picture: Foxtel

BANG FOR BUCK RENOVATIONS

Love It Or List It hosts Neale Whitaker and Andrew Winter share four renovation ideas for adding the most value at minimum cost.

1. Updating the kitchen and bathrooms – a modern kitchen and bathroom adds value while making the home feel shiny and new. You can keep costs down by not moving the plumbing and removing any old cabinets yourself.

2. Add a living room – a second living room was once considered a luxury. Now, it’s considered an essential for many buyers.

Extra bedrooms are always sought after. Picture: Foxtel

3. Converting a garage into a fourth bedroom and adding a carport – this will add a fair chunk of value for a relatively small cost as long as the conversion is done well and includes windows and built-ins.

4. Carving up an oversized rumpus room – adding a partition wall or sliding doors can be a cost effective way to create an additional bedroom, home office or playroom, adding function and versatility

***Season five of Love it or List it Australia returns to FOXTEL, Wednesdays at 8.30pm from September 27 and can be watched on Lifestyle and On Demand.***

Originally published as How to avoid blowing your dough on a home reno