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Is renovating your home really worth its price?

Buying a home and doing renovations are inextricably linked in the property search journey. Upon purchase, there is a tendency for homeowners to want to remodel the interior; We reckon this has to do with the pride that comes with home ownership and the desire to express one’s personality.

Regardless of the intention, choosing to renovate can be both exhilarating and stressful all at once. So even before you start calling the contractors, the question you should be asking is how extensive should renovations be, and more realistically, is renovating your home really worth its price in the first place?

Interior Designer: 0932 Design Consultants

A quick word on purpose and age of the property

Not all home renovations are created equal – it boils down to how the owner is going to utilise the property. Whether the property is going to be leased out, or becomes a place of permanent residence, sets the precedence for how much renovation should be done.

In the former where the intention is to derive passive income, it would make sense to be more economically prudent over the type of renovations to do, as compared to an owner who plans to reside. Let’s face it – it’s easy to get out of hand because buying and owning property is both a practical and emotional decision.

Age of the property also plays a part in determining how much renovation should be done. If you’re buying a resale condo or flat to lease or stay, you’d already expect higher renovation costs – it comes part and parcel with buying an older place as compared to a newly launched unit.

Now, taking both of these factors into consideration, we take a closer look at how much you should be spending given the following scenarios:

1. Staying in a new HDB / condo unit as a place of residence

While we can’t argue that it is a matter of personal taste whether homeowners choose to either be frugal or go all in when it comes to renovating their new place, always bear in mind that you should only renovate based on what you can afford.

Whatever you borrow, you’ll have to pay back, so if you’re planning to take a loan to fund their renovation endeavours, we recommend that you should try to spend under the renovation loan cap of $30k. If possible, you should ideally spend between $20k – $25k and avoid taking a personal loan to add on to your renovation loan debt.

(Always apply for a renovation loan first. The interest can be as low as 3-4 percent per annum, whereas personal loans usually range between 6 – 9 percent.)

Remember that this is just a guideline for those on a tight budget; homeowners who have sufficient capital are welcomed to splurge. If you’re planning on hiring an interior designer, do be aware that design services will cost between $3,000 and $15,000 (in addition to the renovation cost) for an average sized unit. Of course, the cost does vary with the extent of work that needs to be done.

Out of this budget, attention should be given to the toilets and kitchen first, before considering (in order of importance) the bedroom, living room and all other areas. However, if you’re really set on making big improvements to increase the value of your home, you can do so incrementally when you have the capital to do so.

2. Leasing a new condo unit

In addition to keeping to the $30k or less rule, homeowners who intend to become landlords need to ensure that the cost of renovations can, at most, be made back within the first year of rental.

Take for example the following: If your rental income is $2,700 per month, the overall amount you would receive for a standard one year rental contract will be $32,400. Assuming you spent $30k on a loan to pay for your renovations, you’ll find that you’ll have an excess of $2,400 to keep as savings, or to finance your mortgage.

If you find that you cannot recoup your losses during this time frame, then it is necessary to re-prioritise which areas should be renovated first, in order to mitigate overall costs.

The saving grace for new condos is that prospective landlords need not consider a full-scale renovation as most units already come complete with furnishings from the developer. The only things you’ll perhaps need to install are lighting fixtures and basic appliances (eg. faucets, ceiling fans, wall shelving).

Interior Designer: Architology Interiors

3. Staying in a resale HDB / condo as a place of residence

For resale property homeowners, basic renovations to prevent future maintenance problems should be done first (we urge giving pipe leaks, faulty lights and replacement of electrical wiring top priority), ahead of aesthetic ones. This is because the cost of resulting damages will be high without proper maintenance. This is especially true for older properties of between 10 – 15 years of age, where signs of wear and tear will become visible.

Also, it is worth noting that all renovations to fix existing problems should all be done at one go, rather than keep footing separate bills for repairs whenever things suddenly become faulty.

The key to strategically renovate the unit is to go room by room. Don’t see the entire house as a single project: divide it into the bedroom, living room, kitchen, etc., and analyse each one respectively to see what needs to be repaired or upgraded.

Interior Designer: 0932 Design Consultants

4. Leasing a resale condo

Similar to point 3, the focus should be on fixing these repairs before major remodeling is considered. If you think that everything is kept well maintained, the unit will still look good even without new furnishings. Have a fresh coat of paint done, make rooms look brighter with white light, replacing the shower doors and faucets – these small improvements can make a world of a difference in terms of appearance.

For older rental properties, as always, the condition of the house is a crucial factor to take into account when buying to rent out. It is important to note that landlords might incur a higher cost to repair than to renovate. Nonetheless, as mentioned previously, landlords will also have to monitor that the overall cost does not exceed the 1 years worth of rent.

Interior Designer: 0932 Design Consultants


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