So, you’ve been in the property market for a few years, and have now begun thinking about your next move. Over time, it’s only natural that your needs change. Your existing space may not accommodate a growing family, or perhaps you’re ready to take the next step towards your dream home.
But the big question is, do you sell up and move to a new house or do you stay put and renovate? Where should you invest your money? Which option is right for you?
Let’s take a closer look at the pros and cons of moving versus renovating your existing property.
Could renovating be the answer?
With the cost of buying proving to be too high for some, renovating can offer some huge advantages. Particularly if you love the area you’re currently living in, choosing to update your existing property could help you build equity and give you the chance to design a space that meets your needs.
When you consider the potential costs involved in moving house, a renovation looks pretty appealing. You can avoid paying stamp duty, agent fees, and selling fees. On a $1million home, that could equate to an additional $100k! A lot more than what it would cost to update your existing space.
But renovating isn’t without its challenges and there are a few things to be mindful of when going down this path.
The process can take a long time, from planning, obtaining permits to the build itself. It can mean committing to months of disrupted living arrangements, and even additional costs if you have to rent while works are being completed. Of course, each of these factors is dependent on the extent of the renovations involved.
When it comes to renovations, it pays to do your research and get an expert opinion on where to focus for your attention.
It’s also important to be wary of overcapitalising. That is when the costs involved in any home improvements ends up being more than the value it adds to your property.
Here are some top tips by renovating experts Daniel Reilly and Dani Wales from The Red Door Project for renovating your existing property:
- Ensure you have a solid contingency budget. Try to have between 5-10% contingency for unforeseen variations. You can’t predict what is going to go wrong in a project and some items are impossible to know prior to demolition.
- Ensure ALL parties i.e. architect/interior designer & builders are registered and do your homework on them. Requesting to see previous projects is fairly common practice in the industry.
- When hiring a builder, keep in mind that between GST (10%) and Builders Fees (15%), you will lose approx. 25% of your budget. Make sure your architect or draftsperson is fully aware of this and hold them accountable throughout the drafting and planning stages. It’s very easy for a project to go over budget in today’s market.
- Are you renovating to sell, or is it your forever home? We get so focused on not overcapitalising we often lose site of the reason for the renovation in the first place. If it’s your forever home, it doesn’t really matter if you’ve over capitalised does it? We have clients that have spent nearly 3/4 of the value of their home on a renovation because they have been there for 20 years and don’t plan on ever moving.
- Don’t try and live through a major renovation… it can be detrimental to your physical and mental wellbeing.
- If you decide to appoint a builder and have three quotes done, the cheapest one will more often than not end up costing you the most! Always triple check inclusions, exclusions and Scope of Works.
- Seriously weigh up the costs of doing the work yourself vs hiring an expert. It often isn’t worth the heartache and can most likely be done in a fraction of the time.
Could moving be the answer?
In some situations, moving is the more convenient option. There is less time commitment as you avoid having to get planning permits, months of trades and disruptions. Plus, the whole process could be finalised in a matter of months, if you find the right property.
Especially if your existing property has grown in value, it could be a really good move to sell and invest your profits into a new home.
So, what’s the downside?
Well, as discussed earlier, there are substantial costs involved in moving that we often don’t consider – removalists, agent fees, selling fees, stamp duty, conveyancing, insurances and so on. It all adds up.
But if you’re smart about the property you purchase, it could be well worth it. The property could be worth much more five, ten or fifteen years down the track.
If you decide that selling is a better option for you, here’s what to consider:
- Keep an eye on the property market
- Know the value of your existing property
- Watch out for the additional costs involved in selling
What’s right for you?
Firstly, it’s important to note that there isn’t a right or wrong answer here. Every situation is unique, and each option offers benefits as well as challenges. For some, moving may seem like the better choice. Yet, for others, renovating could be more appealing.
Either way, we recommend taking the time evaluate your current situation, review the pros and cons for each option – all while keeping an eye on what’s happening in the market.
There’s a lot to consider, but you don’t have to go it alone.
The Neue Black team can help you navigate your next property move.