We Reveal The Formula To Work Out Your Renovation Budget

It's almost always the question - do we renovate it before we well to try and increase the value or is someone just going to rip it all out anyway?

Many people think it's based on a percentage of the home. Between 10% - 20%. But they're wrong. Thankfully there is a solution that works.

What you need to know is the 'ceiling value' of your property. Every street and suburb has a 'ceiling value'. This is the maximum sale price you could get for your home in your street or area.

It'll involves some deep research on your part or getting an up-to-date appraisal from a local real estate agent. Luckily there are plenty of recourses these days and everything you'll need to know will be in the 'sold' section of online real estate websites.

Simply find the maximum price of a comparable property that has been sold in the past 6 months and that will give you the 'ceiling value'.

CEILING VALUE = MAXIMUM PRICE FOR YOUR HOME IN YOUR AREA

Once you know your ceiling value, this determines how much you can actually spend.

For example, if you bought your house for $500,000 and spend up to $200,000 on renovations, that's a total investment of $700,000.

PURCHASE PRICE $500,000 +

RENO SPEND $200,000

= TOTAL INVESTMENT $700,000

Provided your property is worth that figure or more, you've avoided over capitalising. Of course, if it's worth $800,000, you've made yourself a nice profit of $100K!

What you're actually looking for is the potential value of your home after the renovation.

Get researching!