Is it better to add value to your home or buy a new home?

Your home is outdated and you’re trying to decide if renovating is your best option, or if you should sell and move to a new property. I get this question a lot from home owners. “If I add value to my home would I be able to sell for more, including all the costs in renovating or am I best to sell as is and buy a new home that suits our needs? My answer is; “if you are happy in your location you are best to stay and renovate. If the home does not suit your needs, you are best to sell and move on”.

There are many factors to consider when deciding whether to renovate or buy a new property. To help you decide, there are three important steps to follow to help you reach your decision.

1)              Be really clear about the type of property you want.

This requires you to think about your immediate and future requirements. Whatever your needs, you should compare and contrast them with your current home to help identify any major gaps or shortcomings.

2)              Compare property values in your street and suburb.

This is a very important step. This goes to the heart of assessing how your property stacks up against everyone else’s, and whether there are any major price differentials. The reason for doing this is twofold. Firstly, to help you decide if it’s worth putting the time, effort and money into renovating, and secondly to help reduce the likelihood of overcapitalizing – that is, spending too much on your renovation.

3)              Do your sums

Once you’ve completed steps one and two, it’s time to start crunching some numbers and prepare a budget. Doing your sums is the financial side of the equation, and is all about letting you know what you can reasonably afford – which in itself may determine your best option.

Whether you renovate or sell, it is often a balance between what best fits your personal lifestyle needs, what’s affordable, what’s less disruptive and what gives you the best chance of long-term capital growth. However, if you plan to sell your property within the next one to two years, be very mindful of undertaking a major renovation project – you need to make sure you can at least recoup the cost of your investment.

If you would like any real estate help or advice, please contact Dianne. Contact her on 5952 5480 or 0408 080 034 www.diannerayrealty.com.au