Home Renovation cost and resale value

Hi All,

I have been reading threads about renos but still need more info about renovation costs and the eventual resale value of the house. How much did you guys spend on your renos (kitchen, floor, repainting, bathroom, addition of airconditioning, etc.)? And if you later sold, did you recover the money you spent on reno?

I've been scouting around for established homes in Perth (NOR), for 4 x 2s, built in the late 70s to 80s. Prices are usually 530K+ for the presentable ones (renovated). There are some that come up in the market that are still in their original condition (no renos done) and I was wondering how much should these be selling for.

Truth be told there is an art to it. A $50k bathroom reno might add $200k to the house. Cutting a few trees and improving the front yard might add $20k to the place. Who knows! The people who have perfected the art of “buy, improve and sell” usually stick to hard fast rules like, only aesthetically improve the house with what purely adds value, eg. Pergola, bathroom, kitchen, removal of wall, white pavers out the back etc. They try and avoid anything that unnecessarily adds costs such as those expensive shower taps or soft close draws in the wardrobe. Next, they live in the house for 2 years, doing most of the reno’s themselves and avoiding a hefty capital gains tax. Another big point, they try and sell in Sept when the trees are blossoming with white or pink flowers and there is a buzz in the air.

Then again, all it takes is two potential buyers going nuts over that bathroom reno and you’re in the money. Or a 5 townhouse apartment block starts building next door and you’re up creek without a paddle.

Thanks for your insights Adam.

You're unlikely to make any decent money out of it in anything but a sharply rising market (as it was in the early noughties), but certainly not if you have to engage any tradies. House renovation for profit in lean or flat times is a not always successful even for those that do it for a living.

If the cost of buying, renovating, and selling are not clear in your mind, I would not attempt it. All three stages require different skills.

Hi qebtel,

Thanks for your inputs. I actually intend to live in this house until my kids go to uni (12 more years to go!). House is in Perth, where the current median price has been dropping and is predicted to still drop further this year.
Glad to get confirmation that in a buyer's market, renovating for profit would be difficult.
I actually posed the question to get a better understanding of how the owner-seller is positioned in terms of negotiating the price should I buy the house as-is (unrenovated). I want to put an offer which is lower than his current asking price since the house needs a lot of work which I am willing to do myself in the future. Agent has told me that the owner is thinking of renovating the kitchen and giving the house a lick of paint. If he does, I expect that he will be jacking up the price...

Why would you try to profit from an asset decreasing in value?


Rent if you can until the market has hit bottom. Your first task is to guess exactly when that will be .

If you're happy to DIY reno, buy a structurally sound house that looks crap. The crapper it looks, the harder it is to sell, the longer it sits on the market , the more desperate the seller will be to offload. Bathrooms and kitchens are not really hard to do, Youtube has so many good videos if you are a beginner. Anyone with patience and tenacity can do it.

But whether it is a buyers or sellers market, know the value of the market in the first place. Never believe that the asking price may necessarily be even close to the market value. I have seen a house advertised for $260K get sold for $189K , and that was in a rising market. People are looking to try it on all the time. Dont expect honesty from anyone on the selling side.

Also viewtopic.php?p=1418655#p1418655

Thanks for your insights qebtel.