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The big financial milestones of life: Renovating

Whether you’re renovating for profit or love, there are many benefits of upgrading your home, including increasing its resale value and improving quality of life.

We Aussies are a houseproud lot. With no shortage of inspiration from home renovation programs such as The Block and House Rules, more and more people are jumping at the chance to refresh and improve their homes.

Indeed, last year the Housing Industry Association (HIA) released its latest Renovations Roundup report, which estimated the Australian renovation market to be worth more than $31 billion. The report also found there had been a 4.7 per cent increase in the number of renovations in 2015 – the strongest growth since 2010 – and HIA anticipates further rises to come.

Our reasons for renovating vary: adding more space, updating or restoring an older home, maximising the property’s value for sale. But whether you are upgrading the kitchen or adding a room to accommodate a growing family, there are many benefits of renovating, including increasing your home’s value and improving living conditions.

For Clare Lovett, 31, and husband Matt Yopp, 35, their renovation included physically moving their house from one suburb to another. The couple bought a block of land in Bangalow, in the Byron Bay hinterland on the NSW North Coast, but rather than build a new house, they wanted an older home with character.

The solution? They bought a small three-bedroom 1910 cottage from nearby Clunes and had it relocated to their block about 10km away. The house was literally cut in half and trucked to its new position – ready for renovation.

“Renovating an old home with character is something that we have wanted to do for a long time,” Clare says. “Matt is a builder, so we wanted to do a lot of it ourselves, and when you are doing it for yourself – rather than a quick reno to sell – it’s quite different.

“It took us over a year to find something with the layout we were wanting so we didn’t need to knock out walls, because the old homes have those beautiful VJ walls and we didn’t want to lose any of that original character. It’s really special to us because we are restoring it ourselves and retaining its heritage. And it feels good to be restoring an old home from the area and keeping it in the area.”

Clare and Matt plan to renovate the entire home, including adding a new storey underneath the existing house. However, being such a big project it is being carried out in manageable stages – very manageable considering they also had a newborn baby to care for and a wedding to plan during the first part of the renovation.

“The first stage was to get the house to a point where we could live in it,” says Clare. “After being moved, the house needed to be restumped and reconnected to all the services – power, phone, water. We also added a veranda and redid the flooring. We ripped up the carpet and there were beautiful teak floorboards underneath, so we had them polished. They were a nice surprise and look great!

“Then we repainted inside and out. We also had to do some minor renovating in the bathroom and kitchen, just to bring it up to standard. But the major renovation on those rooms will come later.”

As with any renovation, the planning process started with establishing a budget. While the general rule of thumb is to spend no more than five to ten per cent of the total value of the property on renovations (in order to not overcapitalise), this is dependent on a number of individual things. For instance: the size of the home, whether you are renovating for profit or lifestyle, if it’s cosmetic or structural changes that need to be made, and how long you plan to live in the home.

Clare says their renovation budget had to factor in relocation of the house as well as extra costs such as restumping and having the utilities installed. The couple were also happy to spend more on better quality materials as they hope to live in the house for many years to come.

“The five to 10 per cent figure is a good guide, but it really depends on the individual situation and why you are renovating,” she explains. “We are renovating for us – not to resell – and we want to live in this house forever, so we are prepared to spend more.

“It’s about our lifestyle and what we want rather than making a quick profit. For instance, our veranda was very expensive – it’s wide and wraps around three sides of the house. We chose really high-quality finishes and materials because we want them to last.”

The couple also opted to have bespoke fretwork used on the veranda to match the existing and original features rather than use the cheaper ready-made versions straight off the shelf.

“A lot of people may not even notice the difference but it was important to us to retain the original integrity of the house,” Clare says. “At the time you think it’s really expensive, but I think in the long run it was worth it.”

Clare says that even with careful planning and Matt’s industry experience, their budget ran about 10 per cent over. “There are a lot of unknowns when renovating an old house, which was a bit of challenge.”

Whatever your budget, before launching into any renovation project, it’s worth considering your financial options: do you have enough money in your savings account to cover the cost of renovating or can you tap into the equity of your home loan via a mortgage redraw facility? If not, it might be worth considering borrowing to renovate.

Clare and Matt used the proceeds from the sale of an investment property to buy their home and carry out the first stages of the renovation. To help fund the next stage, they have moved in with Clare’s parents for a period of time and rented out their freshly (and still partly) renovated home.

“Rent prices are so high in this area at the moment so we thought it was a good opportunity to rent the house out to help us get financially ahead so we can do more renovating,” she says.

Clare and Matt are already planning the next stages of the renovation.

“Our block only has a very small building envelope so there wasn’t much option to extend out. Instead we decided to extend up and down, which has worked out well because it’s given us more space and options The next stage is infilling downstairs where we plan to have a living area and move the kitchen down there as well.”

The couple’s main criteria for the future design of their house is for it to be adaptable to their different life stages. Thinking ahead, they want to be able to use all of the house as their family grows, then further down the track as they become empty-nesters, they plan to divide the house – living in the bottom half and renting out the top half, providing a source of income.

But all in good time.

“Renovating is a long process and it can be challenging, but it’s worth it. We feel a huge sense of achievement at what we have done so far. It is something we have both wanted to do for so long and it’s nice to be able to share the challenging yet rewarding experience.

“We really love our home and we want to stay there forever and can’t wait to move back into it. But in the meantime we are enjoying throwing more design ideas around because we are still planning for the next part of the renovation.”

 

 

Information from: www.theguardian.com

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