Renovation explosion

The trend to renovate has accelerated greatly in the last decade, the value now accounting for 40% of national residential investment. Government taxes & costs of moving are forcing this trend by adding on 6% to the value of a property, whilst gov`t taxes & charges add on up to 40% to the cost of a new build. Kitchens & bathrooms make the biggest impact on buyers. The HIA found the average cost last year to renovate a kitchen was $20,000, a bathroom about $15,000. Matusik`s rule of thumb to avoid over-capitalising is to cap spending at about 5% of the property`s value for kitchens, 2% for each bathroom, & 3% for landscaping. If renovating primarily to sell,consider who is the most likely buyer Knowing your target market will help to direct the renovation focus to areas that will appeal to potential buyers. For instance, swimming pools have limited appeal to some because of the maintenance factor. A property aimed at investors for rental return would benefit from bedrooms with their own bathrooms separated by a central living space. Spend only to ensure an achievable sale price comparable to your area. Do your homework, call in your local real estate expert for advice. Over-capitalising occurs when a property has been improved beyond its real estate value. Michael Matusik, highly respected property analyst, advises that ideally the value of the dwelling should be between 1.5 & two times the value of the land on which it sits