Is a perfect looking renovation Profitable? Well yes – and no! It depends on the property ‘numbers’ and it depends on the many renovating decisions made along the way.
The problem with renovating is that we all have this romantic idea that the end result should be perfect. Blame it on TV shows and magazines who have the power to make things look much better than they actually do in real life! Magazines can Photoshop imperfections and TV cameras just don’t generally get close enough anyway.
This expectation can be difficult to overcome – especially when one has a fairly limited budget to work with. If renovating your own home, you do have the advantage of being able to spend a little bit extra without the fear that over-capitalizing is going to send you broke (as long as you’re planning to live in the home for some time). Home owners CAN do a bit extra to get closer to perfection than the average property investor.
Investors need to push aside their emotions and just think of the money for a moment. If not renovating your own home (i.e renovating an investment property or a home you’re about to sell), then try to put yourself in the shoes of your buyer or renter. Do you compromise in some areas of your life and home? Your buyer or tenant are the same. They will compromise on some things in order to live in the area they want, have the number of bedrooms they want, the fact that your property has a north facing aspect with huge windows (or fantastic pool or fully secured yard etc) or whatever the main features of your house are for that buyer or tenant. Even million-dollar homes have compromises; it’s just a matter of working out what compromises are deal breakers and what aren’t.
All homes are going to be different, but the common denominator of what people (buyers and renters or You) want, are a great living spaces (kitchen, living) and bathrooms. Well, that’s almost the whole house isn’t it? Back to confusion!
Each property commands a different answer to what should be compromised on and that is one of the main issues we deal with here at Hotspace.
== Where should money be spent, and where should it be scrimped? ==
== Where should you compromise and where shouldn’t you? ==
If there was an easy answer to this, then every single person who had ever renovated a property would have made money – and we know this is not true!
The problem is that the average renovator (not the strategic renovator) is thinking about every renovation as if it were their own home that they are planning to live in for the next 5-10 years.
Instead of starting the renovation process with the question ‘what should we do to this property’, we (at Hotspace) think better questions to start the process with are:
- What is my budget (work this out from current vs future real/sale of property)
- Who is our target market (and what do they want/need)
- What is the current condition of the property and what needs to be done to meet the functional and emotional needs of the buyer or renter
Knowing the answers to these questions will set you in the right direction for a strategic renovation – targeted to those who will likely be living in the property.
This is because people buy practicality and functionality for themselves and their family, way before they buy beauty or perfection. This isn’t to say your renovation can’t look fantastic (we’re Interior Designers so we wouldn’t have it any other way!) – it’s just knowing what to do to off-set those compromises (with the products, colours and materials you use) in the best way.
Perfect renovations are generally NOT profitable (except at the top end of the market), but functional good looking renovations are!