Deciding whether to renovate your current property or move to a new home is a personal choice, but it could have consequences when it comes to reselling the property, according to Samuel Seeff, chairman of the Seeff Property Group.
If you like where you stay and are not concerned about needing to recoup the costs of the improvements, then it is usually an easy decision.
If, however, you are improving with the view of adding value for a later resale, then you need to consider the costs versus the value that you will be adding, he says.
Renovations involve both cost and often, significant inconvenience. Property owners must therefore decide whether they are able to accommodate both.
In some instances, you may be attached to the particular property and would prefer to make a few upgrades rather than incurring the cost and effort of moving to a new home.
The property owner may also opt to renovate the existing home because it is in a convenient location, and they feel settled. A good, in-demand location also usually makes it easier to add value by improving the property.
A crucial initial step is to objectively assess whether the projected cost of acquiring a new property outweighs the financial implications of improving the existing property.
A cost-benefit analysis is the cornerstone of a sound property decision, said Seeff.
Well planned and properly costed renovations can enhance both your lifestyle and improve the value of your property. Owners should, however, guard against elaborate finishes which may not be everybody’s taste if they ever want to sell the property.
Renovations also often run over budget, and the owner may not be able to recoup all the cost on resale.
On the other hand, moving to a property which offers more space or updated features and finishes might be a more convenient and cost-effective alternative.
While the moving process itself involves costs such as agent commissions and transfer duties, the owner must weigh this up against the cost of renovating. It might also be that the renovations would not add the value compared to the value gained with the new property acquisition.
Many areas have ceiling prices which means that adding further costs might end up overcapitalising the property and you can therefore not recoup the costs on resale. This should then be weighed up against the cost of a new home.
