Renovating your home ebook

Jan 2019

Renovating Your Home: A User’s Guide

Are you planning to renovate your home? Do you want to increase your property’s value before you sell it, or simply create a great living environment for you and your family?

If you’re a homeowner, chances are that parts of your home could do with a refresh. Whether your project is big or small, the key to renovation success is all in the planning.

Stop and think: why do you want to renovate, anyway? Your answer will determine everything about the project – especially what you spend your energy and money on.

Why renovate?

There are two main reasons why you might want to carry out a renovation:

• to create a better living environment for yourself and your family, or
• to maximise your property’s value before selling.

Let’s look at these two reasons individually, because different rules apply to each situation.

If you’re renovating for yourself and you plan to stay in your home long term, coming in under budget might be less important to you than getting the perfect finish you want. If you’re renovating to sell, it’s really important not to over-invest.

Of course you want to attract the right buyer, but you can usually do that without spending a fortune.

Renovating your home for your own enjoyment

If you’re renovating your home purely to increase the joy you feel about living in it, you’ve really got a blank slate to work with – anything is possible and the only limits you need to worry about are your finances.

Most home renovation projects will fall into two categories:

• renovations that improve your quality of life, and
• mprovements that are purely cosmetic.

Of course, if you’re a very visual person, cosmetic improvements will also enhance your personal happiness. But some projects make a concrete, tangible difference to the quality of your home. These might include:

• adding good heating, insulation and ventilation to a cold or damp home,
• ripping out a mouldy or leaky bathroom and starting again,
• extending a cramped kitchen to make an eat-in kitchen diner.

Because these kinds of project make a measurable impact on the quality of your home, they should take priority over purely cosmetic refreshes, especially if you’re renovating for yourself.

Renovating your home to sell it

If you want to sell your home, look at it as if you are a potential buyer.

What kind of first impression is your home making? Is there anything that would put people off when they take that all important first look at your home? Is the paintwork old and cracked? Is there mould or damp in your bathroom? Have you let the garden grow into a wilderness?

Once you’ve looked closely at your home through a buyer’s eyes, you’ll have a good idea what you need to fix to attract the right buyer – someone who will love your home as much as you do.

Let’s face it, you don’t want buyers who just want to try their luck with a cheeky low offer!

As much as we all know property is an investment, a lot of people go with their gut – how the house or flat makes them feel.

As with any relationship in life, we’re all looking for the one, the perfect property that gives us that special feeling. Buyers tend to pay attention to their instincts, no matter how property-savvy they think they are.

So what are the issues that are really worth addressing, and what should you put in the ‘too hard’ or ‘not worth it’ basket?

Issues you should fix before putting your house on the market

1. Poor street appeal

If you’ve met with a real estate agent or two, you’ve probably heard them use the phrase ‘street appeal’. In simple terms, this means how your house looks from the street when the buyer drives up outside. It can also mean this: what kind of feeling do you get standing on the front step waiting for the door to open? As a buyer, do you feel excited and hopeful? Or do you have a sinking feeling in your gut because the front garden and the outside of the house look neglected and shabby?

Poor street appeal is usually relatively easy to fix and may be something you can even do yourself.

If you’re a dab hand with a paintbrush, you can make a big difference to your home by simply giving the front door and surrounds a fresh coat of paint and maybe adding some funky door furniture like a big brass or silver street number or a door knocker.

If your letterbox is falling apart or your driveway is full of weeds, take action right away before you get the photographer round to start marketing your home. For the cost of a bottle of weedkiller and a new, stylish letterbox (think less than $100) you could make your buyers feel a whole lot more enthusiastic.

But what if your house needs more than a tidy up?

What if your house or garden needs a serious overhaul to give it decent street appeal? Don’t despair – any effort you put in before putting your house on the market will reap rewards in terms of attracting buyers to your home.

Consider this: can you realistically do the work yourself or would you be better off to get a professional in to take care of it? Questions to ask yourself include

• have you really got the time to devote to the project?
• do you have the necessary skills?
• can you cope with the stress of undertaking a major project?
• would a professional do a much better job than you?

If you think you’re best to get a professional in to fix the problem, have a chat to a local real estate agent before you hire someone. Any good agent will tell you their honest opinion about whether it’s worth spending money on the particular project you have in mind.

If you’re going to do it yourself, make sure you have the time and energy to devote to the project. A half-painted house doesn’t really create the great first impression you were hoping for.

2. Old, cracked or mouldy paintwork (inside or outside)

A fresh coat of paint is an affordable and manageable way to attract buyers into your home. This is especially true if your walls and window sills are cracked or flaking, or if you have mould or mildew anywhere in the house. It’s also true if your decor is dated or in unusual colours.

In New Zealand and Australia, buyers tend to flock to houses with a neutral colour palette. If you’re someone who likes bright colours, this may seem boring, but go with it anyway.

For highest resale values, keep the colour palette neutral and consistent.

Refreshing your walls in some pale neutral colours could really lighten up dark rooms and make all the difference in terms of getting the sale price you want.

3. Tired, dated or mouldy kitchens or bathrooms

There’s nothing more off-putting to a buyer than the realisation that they’re going to have to spend a considerable sum ripping out an old, dated or mouldy bathroom or kitchen.

Let’s start with the bathroom. In our Antipodean climate, it’s not uncommon to have a problem with mould or mildew in the bathroom.

Have a really critical look at your bathroom – does it have a problem with dampness? If so, you really need to find a solution to this before you try to sell the house. (And even if you don’t sell, a mouldy or mildewy bathroom is very bad for your family’s health.)

Other problem issues in the kitchen or bathroom include:

• Soggy shower curtains – a glass shower enclosure creates a much better impression.
• Baths or basins with old chipped enamel, stains around the plughole, or black mildew growing in the grout.
• Old-fashioned or shabby kitchen benches and cupboards – try getting new doors for your cupboards if they’re dated but structurally sound. A new kitchen bench could be a game changer too.
• Old, cracked or water-damaged flooring – best to rip it up and start again!
• Greasy old range hoods – either give yours a deep clean or, if it’s really bad, consider replacing the unit

Replacing a whole kitchen or bathroom may seem daunting, but if yours is really dated and old, it can be worth it in terms of resale price. Get some professional advice from tradespeople and make sure you get at least two quotes for the work you’re proposing.

With the quotes in hand, you can then decide whether to invest major funds in the project or not. Sometimes you may be able to fix the problem yourself, but be wary of doing plumbing work yourself if you’re not a plumber. The last thing you want is a leak springing up somewhere because you’re not very competent with the grouting gun!

What’s not worth fixing to sell your home?

Most people find that adding a deck is not worth the hassle. Decks often require compliance inspections by building inspectors and need resource consent. They also need a significant investment that probably won’t pay off in an increased sale price.

A new fire, heatpump, or HRV (heat recovery ventilation) system is something that makes a big difference to the people living in the house, but may not get you a higher sale price.

However, if you’re in New Zealand and you’re selling a property to someone who wants to rent it out, you would be wise to meet the new minimum insulation requirements for rental properties that are coming into force in July 2019.

That being said, some buyers may not appreciate or even notice any extra insulation you put in.

Planning: how to set a budget and stick to it

Good planning is the key to success in any renovation project. It’s super important to know exactly what your budget is and then work out a way to stick to it.

So here’s how to plan and budget for your project in 5 easy steps.

Step 1: Visualise the end result

This is the most important (and most fun!) part of planning your renovation. Sit down with the drawing board (and your partner, if you have one) and brainstorm creatively around what you’re hoping to achieve.

If the sky was the limit, what changes would you make to your property? Let your imagination run wild – jot down everything you can think of, big and small, as if money doesn’t matter. You can budget and prioritise later – for now, just get it all down on paper.

If you’re renovating for yourself and your family, what’s most important to you?

Think about what changes you could make to improve your quality of life. When it comes down to it, some changes will make a big difference to your day-to-day life (think extra heating, ventilation and insulation if your home is cold and damp in winter) and some are more for show (the fancy downlighting in your new state-of-the-art kitchen).

When you’ve worked out what’s really important to you, you can set your budget and priorities more easily. Maybe ripping out that damp bathroom is the priority, and doing a makeover of your perfectly functional kitchen is less important.

If you’re renovating to sell, who are your ideal buyers?

Are they a young family just starting out? Or a wealthy couple approaching retirement? Think about what these people will want and need – there’s no point creating a deluxe kitchen with ultra-modern appliances if your buyers just want something practical that they can afford.

Conversely, you don’t want to turn off any high-end buyers by doing the renovations on a shoestring budget. If you’re looking to get a high sale price for your home, you need to invest in order to meet the buyer’s needs – and ideally give them something they really want.

Step 2: Set your budget

Unless you’re absolutely loaded, the basic rule of renovating your home is:

Don’t overcapitalise

In simple terms, this means don’t ever spend more than you would get back if you sold your property. This rule applies whether you’re renovating to sell, or doing home improvements for your own enjoyment. Either way, it’s not wise to spend more than the likely resale price of your home.

So how do you work out what your property might sell for after it’s renovated? Have a good look around your local area. What are similar (but renovated) properties selling for?

You can find recent house sale prices easily online, and you might also like to attend some auctions, just to get an idea of what different kinds of properties go for.

If in doubt, ask a friendly local estate agent for advice. It’s worth getting an agent or two around to look at your house. Explain what you’re thinking of doing, and they’ll be able to tell you if the project you have in mind will pay off, and what your home could sell for afterwards.

Don’t spend more than you can afford

This rule applies whether you’re borrowing to fund your renovations or spending your own savings.

It’s really important not to overspend – if you’re borrowing, make sure you can really afford the repayments. If you’re spending your savings, make sure you have enough money left over for financial surprises, like your car breaking down or the washing machine needing to be replaced.

Set budgets for different areas of your home

It makes sense to break your budget down into its component parts (for example, kitchen, bathroom, bedrooms). The more detailed your breakdown, the less likely you are to blow your budget because you hadn’t considered one aspect of the project – such as tapware or lighting, for example.

Step 3: Decide what your priorities are

Have you managed to stretch your budget to cover the whole house, inside and out? If not, don’t panic. You simply need to prioritise.

Sit down and work out what’s most important to you and your family. Why are you doing the renovation, anyway? What is it you hope to achieve?

If, for example, the driving force behind your renovation is the desire for a lighter, brighter eat-in kitchen, think about where else you could save money and still achieve what you want.

Maybe the bathroom doesn’t need to be state-of-the-art, as long as it’s practical and works well for your family. Maybe you don’t really need the designer taps from Germany.

Step 4: Consider renovating in stages

Sometimes what you want to achieve and what you can afford are very different things. When this happens, you either have to scale back the project to the bare essentials – or you might prefer to do the project in stages.

For example, maybe the most pressing problem in your home is the bathroom, but the rest of the house is also looking a bit dated.

Rather than overspend by tackling everything at once, you could completely redo the bathroom exactly how you want it right now. This means leaving the rest of the project for a later date, when you’ll have more funds available.

Step 5: Include a contingency fund for anything unexpected

As anyone who’s been through a major renovation will tell you, nearly every project hits a snag or a nasty surprise at some point.

Maybe you’ll rip out a bathroom and discover your bath’s been leaking into the woodwork for years. Maybe a downstairs ceiling will collapse while you’re doing building work above it.

Whatever the surprise is, it’s a good idea to include some extra cash in your budget to fix the problem. How much cash you add for disasters is up to you – it’s always hard to plan for the unexpected, and how much you put aside will depend a bit on the property you’re renovating. If it’s 10 years old, hopefully there will be fewer surprises than if it’s 100.

The key thing to remember is: you won’t know what the unexpected surprise is until you’re well into the project – and then there’s no going back!

How will you pay for your renovations?

Before you start any renovation project, whether it’s DIY or getting the professionals in to do the work, you must be sure you can afford it.

Do you have savings put aside to spend on home improvements? Is extending your mortgage or re-mortgaging an option? Are you thinking about getting a personal loan?

Whatever way you’re planning to fund your renovations, you need to keep a close eye on your overall budget. Renovation projects are notorious for costing more than you expect at the outset!

Let’s look at the 3 main options for paying for your renovations.

1. Paying for it out of your savings

This has some advantages if you have the money put aside already. You won’t have to pay back the money you spend, so you save on interest payments. The disadvantage is that if the renovations cost more than you expect, you might not have any funds left to pay the extra. If you need money to finish your project, a home improvements personal loan could come in handy.

2. Extending your mortgage or re-mortgaging

The main advantage of this is that you may be able to borrow the money to do the renovations at a relatively low interest rate. The ‘cons’ are that you’ll have to go through a potentially lengthy application process with your bank. Also, if you’re already stretched to the limit paying your existing mortgage, the bank may not agree to lend you any more money.

3. Getting a personal loan

Personal loans are usually a lot easier and quicker to get in place than getting a new mortgage or extending the one you already have. There are also some very flexible borrowing terms out there – shop around and see what you can find. The interest rate on a personal loan is likely to be higher than the interest rate on your mortgage – but here again, there are some very competitive rates available and you can probably find repayment terms to suit your situation.

Some loan providers have calculators to give you an indication of your interest rate. Get a quick estimate of how much money you can borrow and what your repayments will be like using Harmoney’s personal loan calculator.

Should you DIY or pay someone else to do it?

“DIY… It’s in our DNA’’

While most Aussies and Kiwis think they’re capable of slapping a bit of paint on a wall or knocking up some shelves, the reality is often not quite so straightforward.

You may know what a stud is – and be the butt of multiple Dad jokes while walking around with a stud finder pointed at yourself – but can you install a shelf or hardwood flooring? These are actually very practical skills, which you may not have (yet).

When should you try to DIY?

Here’s a simple checklist for when you should attempt to do it yourself (DIY) at home:

• when you’ve got some practical skills and think you can complete a task to a reasonable standard,
• when you have the time to do a decent job,
• when you don’t need sign-off from the authorities for the work you’ve done (i.e. building work that needs resource consent first and/or a building inspection afterwards, electrical work),
• when it’s NOT plumbing work (water will find a way through any tiny gap you leave and can cause huge damage),
• when you don’t mind living in a half-completed war-zone.

DIY is sometimes not as much of a money-saver as you might think. The professionals will spend less on raw materials, take less time, and won’t have to re-do any work because they do it right first time. Sometimes, it’s worth investing in the pros, at least for major or tricky tasks.

Hiring and working with tradespeople

So maybe you’re looking to hire a tradesperson for the first time and you don’t know where to start. Or you might have had a bad experience with getting professional help, so you’re keen to avoid making the same mistake twice.

Either way, there are some simple rules you can follow to make the process of working with tradespeople go smoothly.

1. Ask for recommendations

This is especially true if you’ve never hired a particular type of tradesperson before. Ask everyone you know if they know anyone who’s any good.

If you don’t know any electricians, for example, maybe your neighbour or your work colleague has one they are happy with. Most people will hesitate to recommend anyone who’s done a bad job at their place.

2. For any project, get at least two quotes

If you only get one quote, how will you know if it’s reasonable? You could be being overcharged. Getting multiple quotes makes good sense – although it doesn’t mean you should always go with the cheapest one. You should also consider whether the person comes recommended by someone you know – and trust your instincts if you think anything’s not above board.

3. Negotiate payment terms that suit you

It’s up to you as a client to negotiate the best deal you can with any tradespeople you hire. For example, a plumber or electrician may say to you: ‘It’s standard in the industry for clients to pay 50% up front before the work begins.’

If you press them, you might find out that these terms are negotiable. Ask if they will accept 25% – they may well agree. After all, they want your business.

4. Watch closely as the work progresses and complain right away if you’re unhappy

Always remember that you’re the client and it’s your right to complain if you’re not happy with any aspect of the project.

If you’re putting in a new kitchen and you’re unhappy with the flooring, the time to complain is as soon as the floor’s been laid. If you wait until after all the kitchen units and appliances are installed, it’s much harder and more time consuming to fix the problem.

For more on your consumer right to complain, and how to go about it, see:

• • the New Zealand Government website, or
• • the Australian Competition and Consumer Commission (ACCC)

When it’s more than just a reno

Challenging and complex projects (solar panels, wind turbines, generators…)

Perhaps your project is more than a simple renovation – maybe you’re looking to reduce the carbon footprint of your home, go off the grid or just become a whole lot more energy efficient.

Either way, expert help is available in your local area – but that’s beyond the scope of this guide – so Google is the place to start your research!

Happy renovating and the very best of luck!

For more tips on how to manage your home renovation budget, check out Harmoney’s blog.

Contact us NZ: 0800 427 666 AU: 1300 042 766

General Disclaimer The information contained in ‘Renovating Your Home: A User’s Guide’ is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice to reflect your circumstances and goals.