With most of the home extensions we have done around Perth, financial considerations have been a major factor for the homeowner. While aesthetic considerations definitely come into play, the bottom line for most is that they want to protect or enhance their bottom line. Consequently, we have spent a lot of time helping people figure out how to get the best “bang for their buck” when renovating or extending a home. Here are some tips that may be helpful.
For Property Investors
If you are renovating a home to sell it, the formula is easy. You find “comparables” for your current home and for what your home is projected to be after remodeling. If the difference between the two is more than it will cost to remodel, extend or renovate, then you should go ahead because you will make money.
For rental, the formula would be similar but more complicated. We don’t want to get into a complicated discussion of gearing and rental yield, but more often than not the bottom line is to make sure that the money in increased rents will exceed the cost of renovation.
A lot of property investors go the renovation route and many are successful at it. Most of those who are really successful do it themselves or have their own crew that can do it for them. For those of you who have another job and don’t have time to even think about hiring your own crew or doing it yourself, a company like Next Level Extensions makes a lot of sense.
However, you need to make sure that you are working with the right builder. If you aren’t, you can lose a lot of money. This often derails the “careers” of well-intended, would-be property investors.
So, what do you want from a builder? Let’s take a look.
High Quality, Reasonable Price
Many builders offer low prices but then do shoddy work. Often, it costs the investor more to fix the shoddy work than it would have cost to do it right the first time. Always hire a builder with a track record of providing quality home extensions and renovations. It is worth paying a little more if you know the work will be good enough for you to turn a profit.
All Costs Upfront
Nothing can sabotage an investor faster than hidden or “surprise” costs. You should always work with a builder whose estimates include all costs upfront. Any projected budget should represent the maximum you will spend, not the minimum.
Always work with a builder who completes projects within the projected deadlines. When you purchase a property for investment purposes, every day that you don’t have tenants costs you money. Every month you hold onto a sale property costs you interest on the loan. These costs can add up quickly for a small investor.
It is crucial that you find a builder who has a reputation for integrity and honesty. It is better to find one that has been in business for a period of years as opposed to months, because you know they won’t be out of business or disappear tomorrow.
If you are going to live in your home, the same principles as for investors apply, but you have a bit more “wiggle room.” All homes appreciate over a period of ten years, so you won’t really be under pressure to turn a profit right away on a home extension.
The main financial consideration for you would be whether or not you save enough time, money and effort to justify extending instead of moving into another home or building a new home. In most cases, we have found that we can turn someone’s current home into their “dream home” for less money than it would cost to build a new one, but that isn’t always the case with other builders.
Next Level Extensions
If you are thinking of extending your residence or an investment property, call Next Level Extensions today for an estimate. Our number is 1300 948 094.