Are you wasting money or adding value with your home renovation?

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Case study: I know somebody who purchased a house for $1.5 million. It’s a two bedroom house, has a narrow dark staircase and two very small bathrooms that can’t even fit a bathtub. The kitchen is small. Generally there isn’t much to like about the house. However, he and his wife redid the bathrooms and kitchen, made other changes including redoing the floors, repainting and decking the internal courtyard, probably spending in excess of $150,000. He got divorced, remarried and he and the new wife continued to live in the house. Now despite there being three bedroom houses with two big bathrooms across the road on sale for $1.2 million, and four bedroom, three bathroom houses a few doors away for $1.5 million they probably spent another $150,000 redoing the bathrooms and kitchen, increasing the size of the balcony, altering windows, adding cupboards, changing window coverings, etc. After all this expense they still have a house that has two bedrooms, two small bathrooms, a narrow dark staircase and which is probably worth less than $1.2 million! What a waste of money.

Now, as I’ve suggested there was an alternative to purchase a bigger house in the same neighbourhood. But, clever innovation and with a spend of $200,000 they could easily have added a third bedroom, which would have been a very generous master bedroom with a third bathroom (big enough for a proper bathtub and a shower) and a large balcony. Suddenly their $1.2 million house could have become a much nicer house to live in that would have been valued at over $1.4 million.
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But really the problem with the house is it has ‘bad bones’. It’s poorly designed and has many features, including the staircase and bathrooms, which are very difficult to change. Spending any money on the house is really throwing good money after bad.

Ask these questions before embarking on a renovation

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​It’s important to assess whether the changes, renovations and remodelling your house will be money worth spending by asking these questions:

• Are you adding value to the house?
• Is the house structurally sound? It’s pointless upgrading and changing a house that’s structurally unsound, maybe one whose foundations are sinking, that’s infested by white ants or wood rot, or that’s of poor quality.
• Is it possible to improve the bad features? As above, it’s expensive, sometimes impossible, to change staircases and enlarge bathrooms.
• Are the changes you’re proposing really going to make a difference to what you don’t like about the house or are you skirting around the real issues?
• Would it be simpler and cheaper to find another house that you really like, or even, bash down the existing and start again from scratch?
• Once you’ve finished with the changes will the house still be a cohesive architectural style throughout, or is it going to look like a piecemeal hodgepodge of bits added on wherever changes could be made?
• Can you easily match the existing finishes? Costs can quickly escalate where the existing house has to be altered so that it matches the new portion.
• How will changes in the neighbourhood impact the value of your house. It’s senseless spending lots of money renovating your house if a new highway or block of apartments is going to be constructed on your doorstep.

As the saying goes, “you can’t make a silk purse out of a sow’s ears”, nor should you spend the energy and money in trying to turn a house with ‘bad bones’ into something that it can never be. 

​Want to learn more about renovating and building houses?

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Paul Netscher has written 2 easy to read books 'An Introduction to Building and Renovating Houses - Volumes 1 and 2'. An Introduction to Building and Renovating Houses Volume 1 deals with Hiring Contractors, Managing Construction and Finishing Your Home.  and Designing your ideal home Volume 2 deals with Finding Your Ideal Property and Designing Your Dream Home. 
​("Great for those that DIY. Very helpful in home renovations!" said a Reader on Amazon.com 5*****)