08/10/2013

Every month, leading reno expert Cherie Barber answers your questions on renovations. This month, Cherie tackles questions on whether more rooms equals more profit, whether granny flats add value, and where to spend a $10k reno budget. 

Question: Is it true that more rooms equal more profit? When you renovate, under what circumstances would you add an extra room or convert a living room into a small bedroom? We have a two-bedroom house and love the space, but we were told by our agent that adding an extra room would fetch a higher price when we sell.

Answer: In principle, what your agent advises is true. Reconfiguring the layout to add an extra bedroom is often a clever way to bump up the value of a property. Obviously something advertised as a threebedroom worker’s cottage is going to have a higher asking price than a two-bedroom worker’s cottage.

However, it very much depends on how you manage to squeeze in an extra bedroom. The bigger the footprint of the property, the more leeway you have. You may well be able to shave some space off a massive living area, put in a cheap stud wall, and voila! – you have a new child’s bedroom. But if you’re taking what is a normal-sized living room and chopping it in half to create a poky bedroom, then it’s doubtful you’ll impress anyone. Your master bedroom will probably be bigger than your shoebox-sized living area.

So it’s a matter of studying the current layout to see if there are any areas you could forfeit or consolidate without compromising too much of the existing living space. Could you reclaim the laundry by adding a washer/dryer to the bathroom? Do you really need a separate dining room in this day and age? Ditto the sunroom, if there is one. Could you rethink the front or back entry points so you can incorporate an existing foyer into a new bedroom(they’re often dead space)? There might even be roof space you could convert.

Look at what you can afford to lose and then at how you can go about converting the freed-up space into a bedroom. It may mean sealing up doors and creating new ones on different walls, or moving existing walls or erecting new ones, but if you think outside the square and can see a way to create a third bedroom without overly compromising the space you have, I say go for it.

GRANNY FLATS
 
Question: What’s your view of granny flats in relation to adding value to a house We have a 600sqm three-bedroom house and one of the agents suggested we should consider putting a granny flat in it. I think the area is too small and would much rather spend that money renovating the property to add value. What do you think? 
 
Answer: The same principle applies here as to the question about adding rooms. Whether choosing to add a granny flat or an extra bedroom, you have to weigh up the value you’ll be adding versus what you might sacrifice
in the process.
 
Putting a granny flat into a tiny backyard doesn’t make sense. You now have a house with no useable rear yard, and not everyone will have use for a granny flat anyway. And you’ll almost definitely have to put your plans through  council, which is costly and time-consuming.
 
You’ll need power and water connected, which is not cheap. It will possibly make more sense if there is an existing outbuilding – say a brick shed – with utilities already connected that you could convert at minimal cost. But it doesn’t sound like that’s the case here. My advice would be to channel that money into renovating the property, and possibly consider adding an extra bedroom instead.

 

WHERE TO SPEND A $10K RENO BUDGET 

Question: How important do you think is the exterior of the property when renovating? I have a budget of $10k to renovate our home, which we’ll turn into a rental. Can you please suggest a good breakdown as to where we should be spending this budget? We have a three-bedroom brick home with a decent yard.

Answer: Renovating to rent and renovating to sell are two very different business propositions, but there are a few key requirements common to both. First, the renovation budget needs to be carefully calculated based on the current property value. Plucking an ‘affordable’ number out of thin air is not the scientific approach I personally advocate or teach in my workshops. But not everyone has access to the kinds of funds needed for the ideal renovation.

If a property can get by with a cosmetic renovation, then I allocate 10% of the property value to the renovation. For a $350,000 property, that would be $35,000 maximum for a complete refurbishment inside and out. If the $10,000 you have to spend is less than 10% of your property’s value, then you need to be particularly strategic about where you spend the money.

Rather than reaching so high and stretching the budget so thinly that you have to take shortcuts with everything you do, limit it to a few key things that deliver maximum bang for the buck: painting throughout, updating the flooring if it’s shabby, and sprucing up the kitchen and bathroom.

You may not have money for a complete bathroom reno, for example, but maybe the budget could stretch to replacing the dated vanity and maybe some White Knight tile paint for the daggy tiles. And yes, the exterior is very important, especially the front facade, as that’s the first thing people see. At the very least, make sure everything is neat and tidy. Mow the lawns, clip hedges, clean out the garden beds, and maybe even consider some paving paint if you have a bare concrete driveway.

The second important point is to match the style of renovation and quality of finish to the market you’re hoping to appeal to – that goes for whether you’re planning to rent or sell the renovated property. You’re simply wasting your money if you opt for a marble bathroom and all the latest kitchen finishes and Euro appliances when all the neighbouring properties have set the benchmark at laminate and lino. Conversely, if you do a cheap and cheerful renovation in a suburb of multimillion- dollar mansions, you could find yourself stuck with a white elephant. Listen to what the market is asking for and deliver accordingly.