Finding what’s best for you comes down to knowing how to act on a few key financial and lifestyle considerations geared well into your future vision. After a few years, most homeowners with changing lifestyles and needs are faced with a decision to either stay in their existing home, but invest in some substantial renovation work to add value and/or space, or simply sell up and upgrade to a new home (which may be an established home, or a new build).
The former decision is usually made because homeowners sometimes intend to stay in a particular suburb, and have carefully thought out a budget to add value to the property through renovation. The latter decision – to sell and upgrade – is typically made when it makes better financial, personal and practical sense to move on to a new property and a new lifestyle phase, which their older house can no longer accommodate.
While there are pros and cons to renovating and selling, these fall into the categories of personal and financial benefits and the drawbacks pertinent to each outcome. Below are some typical considerations most homeowners make to help weigh up the decision.
In a typical scenario, a couple has lived in a two-bedroom house for some time and needs to add an extra bedroom or two, perhaps even an extra bathroom to accommodate a growing family. Perhaps they have children or intend to, and may require another floor, or have the backyard space to make a large self-contained flat. They make the decision to stay in the area for at least another 5-10 years due to easy access to local schools and employment and think they’re likely better off to renovate rather than sell.
Even before deciding to go down the renovation path, in this homeowner scenario, they would need to get their property valued and gain a sense of the top-priced homes in the suburb on a similar size block. This will ensure their budget for renovation isn’t overly ambitious relative to the suburbs median, to avoid over-capitalising.
They would also need to get advice from a builder as to the property’s current condition, to ensure against unforeseen structural and wiring problems that could derail the project. Another important consideration is council regulations and approval from neighbours, which can prove to be a long-winded process.
In another scenario, a couple has lived in a house for some time and decide they have the funds to sell and upgrade to a property that fits their lifestyle. Perhaps the area of the property has changed or no longer suits their future plans. A potential renovation using the same funds they could put into a new property wouldn’t go as far for them or the property and, thus, incurring the cost of buying and selling to upgrade doesn’t concern them.
Check out our simple list of pros and cons you should consider if making the decision to stay and renovate or sell and upgrade:
- Manufacturing value to modern standards to keep up with current market trends, ie paint is very effective and relatively uncostly.
- Adding space to accommodate more occupants and improve the overall comfort and functionality of the home is possible.
- Lowering energy costs through appliance upgrades and installations; new low costs fittings and fixtures.
- Future buyers have less to object to due to the improvements in fixtures and fittings, so should yield a better sale price down the track.
- You can generally enjoy more creative control over the process, décor and layout, while still retaining the things you already love.
- Homes that overcapitalise on ‘renovation’ in the form of adding anything high maintenance often end up being perceived as ‘out of place’ with homes on their street.
- Renovations don’t usually go as smoothly as they appear on popular TV reno programs, so it’s best to plan for them taking a little longer than you’d ideally have hoped.
- Occupants of a house under renovation will normally have to move out and incur rental costs and possible storage costs when the works get completed, which can often be up to 1 year.
- Can go well over budget if issues are encountered by the builder along the way, causing added financial stress and the risk of over-capitalising.
- It can often be quicker and more cost effective to actually knock down and rebuild the entire house (a topic for another day!)
Selling and Upgrading
- You can use capital growth in your existing home to purchase a more accommodating property, often in a better locale to suit your future needs.
- If you build rather than buy established, you can get exactly what you want and its all brand new, not just parts that get renovated.
- Accommodate the present and future needs of your family without enduring a messy renovation or making compromises.
- The opportunity to buy a house with built-in value such as attractive façade, prime orientation and solid bones.
- For those that build new, get full structural guarantees and even maintenance-free periods that you won’t get on a reno, or even buying another established home.
- The transfer of ownership costs can creep into the thousands – this includes conveyancing, marketing, agent fees, and council fees (stamp duty on the buyer’s account).
- Depending on the property cycle, coordinating a move from one house to another could mean one has to rent in the interim.
- The uncertainty of selling times means there’s an element of risk when it comes to purchasing property without having an unconditional sale on your existing house.
Each person will have their own set of unique requirements and financial situation, however as a general rule, if the renovation can be kept relatively small it is often more beneficial to stay and renovate. However, if the renovation needs become substantial, most will find that it’s better to sell up and either by an established home or even better still build a new home from scratch!
Thinking of starting a renovation project? Our team at iBuildNew can help you! Contact us on 1300 943 640 or firstname.lastname@example.org.