Thinking of going DIY? Renovations are one way that a lot of people add value to their property investment. With the right home loan, you can even tap into your equity to conduct the work, minimising the cost to your regular savings account. But how do you make sure it will actually add value to your home? Real Estate Institute of New Zealand figures show that Auckland's median price rose by more than $100,000 in the 12 months to October. When everything's going up so fast, how do you ensure it's your renovations that add value and not just regular growth? It's a tricky point to parse, but let's start with some simple ways of reducing stress and costs associated with the process.
This doesn't just mean making sure your tradies are qualified - we're sure you already know to do that. You also need to make sure your consents are in order. For example, you'll need approval if you're doing any of the following in the Auckland council area:
Without the right consent, you can be fined, and might have a hard time getting insurance for the renovations. You don't want to leave your property investment exposed like this, so make sure you've got all your legal bases covered.
Just because you can do something doesn't necessarily mean you should. It might be tempting to buy top-tier finishes for your investment property, but if it isn't in a high-end market then will they necessarily entice buyers to pay more?
Similarly, make sure your renovations match the neighbourhood. For example, Ireland Builders' Rachel Ireland told Westpac in August that in areas where parking is scarce, like Ponsonby, adding a garage can add huge value to a property - as much as $200,000. This isn't a hard and fast guarantee, but it goes to show that making your work meet the market can pay dividends. Don't just have your tastes in mind; consider what other buyers will need.
As of January 1 2015, everyone who draws up a contract with a licensed building practitioner gets a 12-month period of repairs from this party. If you tell them about the defect in writing within a year of the work being completed, they have to fix it. Making sure your contracts are thorough and upheld can save you stress and money should anything go wrong. This is hardly the be-all and end-all of making renovations work on an investment property, but they're three steps that could save you a lot of trouble in the long-run.