Figuring out how much to spend on your home renovation can be tricky.
How much should you spend when renovating your property to increase the value, but avoid overcapitalising?
Property expert Andrew Winter reveals one simple thing that will take the guesswork out of your budgeting: working out your home's ceiling value.
The importance of ceiling value
Although most people think working out a renovation budget is roughly 10 or 20 per cent of the value of the home, but Andrew says that simply isn't true. Instead, the first thing you should consider is the ceiling value of your home.
"Every street and every suburb has a ceiling value," Andrew explains. "The ceiling value is the maximum price you can get for your home in that area – this is the figure that should determine what you can spend to avoid over capitalising."
How to find your home's ceiling value
When it comes to finding out what your home's ceiling value is, Andrew says the key is lots of research.
"There are plenty of online tools to help you," he tells. "The sold sections of real estate websites have all the data you’ll need. Simply find the maximum price of a comparable property that has sold in your area in the last six months and that will give you the ceiling value."
Now you can see what the potential value of your home could be after the renovation and work out your budget from there.
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