Last year we saw an explosion in demand for home renovations. This was also accompanied by a continuation in the growth of house prices. In 2021 we saw house prices in Auckland rise a staggering 27.9%. So, if that is the case then can renovations still be considered a wise investment? Meaning, is it worth the effort and money to try to increase the value of your home if it is going to increase anyway.
While we have certainly seen house prices skyrocket regardless of the condition of the home. There are still many great reasons to renovate your investment property.
One big reason to renovate is if you own an investment property you plan on renting out. Many people do not see the worth in renovating a rental. Many will disagree with us here, stating that the renovations will wear out by the time they are ready to sell. While this is true to some extent, we must consider the benefits first.
Good home renovations of around $6,000 – $7,000 can help you attract higher earning tenants. With such an investment into say your kitchen, one could easily collect an extra $20 – $30 rent a week.
Home Renovations before market
If you are ready to sell and move on elsewhere it is still worth renovating in our opinion. Depending on the condition of your home, a renovation could add significant value to the listing price. Generally we see a doubling of initial investment for a well suited home. A new kitchen could increase your final price as much as $10,000 for a modest investment. If the cost of the renovation is $5,000, then you would be walking away with an extra $5,000 in profit.
It is important to remember that rising home prices go both ways. Just as you stand to make substantial gains, you also stand to be priced out of up and coming neighbourhoods. So squeezing your investment for what it is worth is vital to stay in the market.
If you are interested in making some home renovations, then give us a call at 0508 2 73668 or contact us online to discuss your next home renovations.