Sources：archiparti – http://www.archiparti.com and Morris-Property.com
Smart Renovation = Smart Investment?
With the help of professional interior designers, old and boring homes can transform into a eye-catching new space, at the same time brings home owners the possibility of increased rent yield and home value appreciation.
Perceived Value = Actual Cost X 3
In renovating terms, perceived value means the dollar worth that a physical property change has in the mind of the property owner or buyer. Actual cost is the physical amount of money spent making the change. The amount of perceived value that you add to a property depends on a number of factors, but interestingly enough, people’s perceived value on a renovated home is usually 3 times the actual cost!
In mindset of global stock market slowdown, perhaps investing in home renovation for an appreciation of home value and rental yield is another option of investment tool worth investigating? Let’s look at ways to achieve the biggest and most valuable renovation change with a limited budget.
What’s Your Purpose of Renovating?
When you have a unit and a budget on hand and is about to start renovation, before you start looking for interior designer or contractors, the first question you should think about is to ask yourself “What’s my renovation motive?” Depending on the different motives, the renovation options will differ considerably.
1 Rental → Wish to Increase Rental Yield – One thing you may focus on is choosing inexpensive, low-VOC paint in modern colour, which is quick and effective. Also, another good idea is to change replace old amenities such as faucets, shower curtains/doors, door knobs etc., as they are not expensive but give a much upgraded feeling to the apartment.
2 ReSale → Wish to Increase Increase ReSale Price– Adding a room or a bathroom is a good way to increase home selling price as it enhances the space’s functionality; in the eyes of potential buyers, the price that they are willing to pay for increases substantially for a home that can accommodate 5 people rather than 3 people. In addition, it’s also good to perform some touch-up and maintenance works; however, it’s not recommended to undergo large renovation works as the buyer may want to demolish everything upon moving in.
3 Self-Use → Need to Adapt to Family Circumstance Changes – If you are planning to welcome new family members or have developed a need for a home office, you should carefully consider all the relevant points such as whether noise cancellation is a must? Do you need good natural lighting for the new room? Does the renovation need to accommodate your need for the next 5-10 years? Etc.
4 Investment → Space is for Business Purpose – Many home owners are starting to renovate their spaces to accommodate special market needs, such as converting an extra room to be an airbnb room, or converting a space to be locker storage warehouse, so immediately the frequency of usage is much improved for hundred times. However, such act requires thorough market analysis and any relevant legal requirements. Homeowners should also remember the 8 Golden Words of “Wind, Fire, Water, Electricity, Gas, Ceiling, Floor, Wall” before conducting renovations. Lastly, friendly reminder to not be a “copy cat” and follow the crowd when renovating for business needs; renovation needs time and often times before a renovation is completed, the market may already be flooded with suppliers if everyone is thinking to do the same thing! Try to be the creative entrepreneur here!
Top 4 Renovation Focus
Based on our experiences, we have summarized here a list of Top 4 renovation actions that aims to achieve the most impact:
1 A Bright Kitchen
Kitchen is regarded as a home’s center of attention as the kitchen serves to unite the family members and create a sense of happiness. An improvement in kitchen will provide you an increase of 60-120% in your investment as long as the kitchen is renovated neutrally, not too fancy or dull. It should never be modeled too extravagantly as it is best suggested to fit into the style, size, and quantity of the rest of the house and the neighborhood. The buyer will have a deceased interest in a luxurious and fancy kitchen.
If you have a limited budget or plans to rent the home out, you may consider using inexpensive paint to repaint the kitchen to bring it alive. You may also change to new faucets and sinks, as well as changing to engineered countertop for easy maintenance. Again, please consider the 8 Golden Words of “Wind, Fire, Water, Electricity, Gas, Ceiling, Floor, Wall” and ensure the kitchen is renovated according to any legal requirements (for ex: no gas stove is allowed in an open kitchen without a fire rated door).
2 Adding a Bathroom
Bathroom is very important in a home with the convenience it brings. Through adding more bathrooms in your home, it may bring an increase in value of about 80-130% of the renovation cost. Before the renovation, you should consider whether you need to install handles and anti-slippery floors for children and elders? Is there any helper who will share the bathroom usage? Should you install a shower room to replace the tub for safety reason? Moreover, it is very important to confirm the waterproofing work, whether water pressure is enough, cold and hot water supply is normal, and any rust off problems to be fixed, etc. during renovation process.
3 Adding a Room
Adding a room could help bring more possibilities and imaginations to a home. Before renovation, you need to ensure the new room and the old space both can retain the necessary ventilation(windows/air conditioning)and natural lighting. Also when choosing wall materials, you may consider brick walls which offer the best noise, water and heat insulation; if you have a very limited budget, you can consider wood paneling which is much cheaper, but comes with the price of noise. Other wall material choices include full height cabinets, flexible movable wall separations with wheels, or even glass as feature wall.
4 Improve Outdoor Area
Have you ever imagined having your personal outdoor space at your home? It could be a small garden, a balcony, or even a rooftop area where you can enjoy a glass of wine with friends and families? Many people who cares about quality of life takes great emphasis on outdoor space; not only does it improve the appearance and the overall aesthetic appeal of your home, having an outdoor space would ultimately increase people’s perceived value on the home. Of course, you need to ensure that the waterproof and insulation works are well completed. For landlords who are planning to rent/sell the home out, you may also consider placing some temporary furniture to help potential renters imagine how they can use the space in the future.
“The devil is in the detail”; such phrase is equally applicable to home renovations. In addition to the above 4 renovation tips, the most basic concept is paying attention to small details such as keeping paint on the walls fresh and clean, getting rid of molds, leaking roofs, walls that are wearing off, etc. These small details can show to buyers that you take good care of your home, making it a safe, clean, and healthy home.
Sources：archiparti – http://www.archiparti.com and Morris Property
archiparti is a archiparti is a Hong Kong-based tech startup with international vision, connecting project owner with freelance designers.
Morris-Property.com is an innovative Real Estate operation in Kowloon, Hong Kong