‘Reno-wait’ and see: Why a slower market could be ideal for renovators

A stable economy, easy access to online tips and even too many seasons of The Block have all contributed to a thriving renovation culture in Australia.

But there’s another factor that is leading Australians to renovate in record numbers. Home owners are using the slowing market as an opportunity to refine the place they’re in, because they know they might be there for a while.

We spoke to two sets of recent renovators – one a success story, the other a distress story – about their motives, what they’d do again (and what they wouldn’t). We also asked for the one vital piece of advice they would give anyone about to start their own episode of home improvement.

Both couples had the same advice: Do your research, make a plan and, most importantly, stick to it.

House of horrors

“I budgeted $20,000 and suddenly got a bill at the end for $50,000, saying you have seven days to pay.”
Cameron (34) and Steven (30), Prahran, Victoria

Newly engaged couple Cam and Steven were thrown into renovating when they were forced to redo a leaking balcony at their inner-Melbourne apartment.

“This was not a renovation by choice. Almost the whole apartment had water damage and the floorboards were cupped,” Cam said.

Turning obstacle into opportunity, he decided to also renovate the kitchen – and turn what had been intended as an investment property into a home with his personal stamp on it.

Cam’s insurance covered the cost of the floorboards. He budgeted an extra $20,000 towards increasing the value of the two-floor cathedral-ceilinged apartment in Prahran.

“You can imagine my surprise when I got a bill for $50,000 at the end,” he said.

How did this happen?

“We had builder and developer issues from day one. The developer kept dragging their feet, and the premium kept rising because the builder needed to fix a leak that they couldn’t access.”

But that was just the start of the wallet haemorrhage. Like many first-time renovators, Cam was new to much of what was going on.

“We’d go to pick out benchtops – with no prices on anything. Insurance only covered certain surfaces and the builder never said no due to budgeting issues, or that things were going up 10 or 20 per cent,” he said.

“It was probably me being naïve, but if I did it again I’d be very stringent about what’s costed in the quote.”

Time turned out to be almost as much of an issue. Three months was set aside for the work – but it took a year.

Nonetheless, Cam and Steven love the new interior design of their apartment (which is now a place they can call home). That appeal has also made them focus on the apartment’s eventual resale value.

“I wanted clean, simple and timeless, so it doesn’t matter who comes into the apartment, it will still look nice,” Cam said.

“If I sold it, someone could come in and make it their own … I achieved that.”

A substandard renovating experience, but a stunning result.

However, the overall experience was tarnished by concerns about more leaks and a bill that was nearly three times what had been expected.

“If I did it all over again, I’d do more research on local builders with great reviews,” Cam said.

“I’d cost out exactly what was required, create a plan and stick to it. Because, once you start changing your mind while renovating, it’s a domino effect.”

Bills, bills, bills

Because the renovations had been budgeted to cost only about $20,000, Cam decided to fund it through his credit card, rather than another loan.

If your knowledge of renovations and financing them is limited, it’s best to seek professional advice, and consult a financial planner.

A story of success

“We achieved everything we could have wanted from our renovation – and we built a lot of equity too.”
Courtney (32) and Sam (33), Vermont, Victoria

For Courtney and Sam, the exciting addition of a new family member meant a home renovation was not only necessary, but also time critical.

Their 1920s home was well overdue for a makeover. In the end, that meant a new living room, bathroom and laundry, and an upper level with two bedrooms and a bathroom.

Courtney also took the opportunity to landscape the garden, add a garage and alter the front façade.

A big win on home turf for Courtney and Sam.

You have to wonder: Would it have been easier to just buy another home?

“We weighed up the cost of moving and the chances of buying a new home with the same character – and we believed it was cheaper to renovate,” Courtney said.

“Plus, we loved our quiet dead-end street.”

With the impending arrival of their new baby piling on the time pressure, Courtney and Sam decided to do all the work at once.

First, they stripped the house back to its bare bones to make sure there were no nasty surprises. But they were also determined to retain its best qualities, with a view to potential resale value.

“We wanted to keep old features like the traditional wooden floors, skirting and doors,” she said. “We also wanted to make sure it was neutral.”

Neither Courtney nor Sam had any renovating knowledge or experience, but she managed to turn her passion into a secret weapon.

“I love looking at houses [online] as they’re usually looking their best for sale,” she said. “I would also attend open houses to look at them in real life, because pictures don’t always tell you the story.”

There’s nothing kitschy about Courtney and Sam’s bright, timeless kitchen.

Still, the project wasn’t without its hiccups – which could have been far worse if the couple hadn’t done their research and made the best of the lost time.

“We needed to remove a big tree out the back, which took two full years to get council approval,” Courtney said. “We used this time to engage with an architect to create plans and have them submitted.”

All that hard work significantly increased the house’s value – adding an estimated $600,000 for the $310,000 Courtney and Sam spent.

Plus, the renovation added space for a new baby (or three) and turned their already charming home into a star – successes they put down to a simple strategy.

“Stick to your guns,” Courtney said. “If you have your heart set on something, don’t compromise. You will regret it later.”

The bottom line

Knowing their renovation was massive and the house was being rebuilt almost from scratch, Courtney and Sam needed access to lots of money. Fortunately, they had plenty of equity in their house – it funded the entire project.

To gauge your borrowing power and the equity you have in your home, get in touch with your broker or bank.

A final word

In a slowing property market, accessing equity from your home to fund renovations can be more difficult (as decreasing home values limit borrowing power).

However, there are different options available for financing. Just be sure to keep within your budget as best you can and remember the best advice from both couples: stick to your plan.

This article is for information only and is not intended as a substitute for advice from a qualified professional.

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