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The Best Way To Add Property Value - And The Mistake To Avoid · Making Cents

• 0:00
  Renovating to add value is the dream, over capitalizing is the nightmare.
• 0:06
  And as people try to balance the two, things can go pretty badly wrong.
• 0:12
  Today's letter is from someone who badly needs more space.
• 0:15
  So they want to invest by expanding their current house but wanting more space and knowing which space to add.
• 0:24
  Very different questions and how to do it in the smartest way for your money.
• 0:30
  Vanessa Williams from realestate.com, coder ANZ has seen behind the scenes on what actually gets a listing more money.
• 0:37
  Adding bedrooms and adding bathrooms are the two very crystal clear ways that we can see that value will be added to the property.
• 0:46
  So welcome to Ask the Experts where each week we take your questions, get them to someone from inside the money.
• 0:52
  World and get them to give you.
• 0:53
  The answers you actually need.
• 0:56
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• 1:03
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• 1:07
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• 1:14
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• 1:33
  All right.
• 1:33
  Welcome Vanessa.
• 1:34
  Ready for the letter?
• 1:35
  I am.
• 1:35
  Thank you for having me back again.
• 1:37
  Thanks for coming in.
• 1:38
  All right.
• 1:39
  Hi Frances.
• 1:40
  I'm planning an extension for our house.
• 1:42
  I'm getting confused though on what will add the most value.
• 1:45
  We need some extra living space and I also want an extra bedroom.
• 1:50
  We currently have three.
• 1:51
  Want four.
• 1:52
  I'd also like another bathroom and toilet.
• 1:55
  Currently there's only one bath and a separate toilet.
• 1:58
  We have land so could extend out and take up some of the garden.
• 2:03
  We also have underneath the house with heaps of space.
• 2:06
  It's just dirt right now which we initially thought could be used but a builder said it would be cheaper to extend out rather than build under the house.
• 2:17
  What should we be looking into?
• 2:19
  How do you renovate a property without over capitalizing?
• 2:23
  Which quite literally a million dollar question.
• 2:26
  Sometimes in a very long time depending on the kind of builder that you get.
• 2:31
  Yes, very much so.
• 2:33
  So okay, let's start with the expanding the house.
• 2:35
  Extra bedroom, extra living space, extra bathroom.
• 2:38
  That's quite a laundry list of things.
• 2:41
  Some really strong pulls there for both the lifestyle and the money side of things.
• 2:45
  And Those two can conflict, right?
• 2:48
  They absolutely can.
• 2:49
  And I think feels like they are looking to extend to stay there a bit longer, which I think is really, it's a great decision for you to get really clear on when, before you're even renovating.
• 3:00
  Am I renovating to stay or am I renovating to sell?
• 3:04
  Now I'm not saying you certainly shouldn't think about the selling if you are renovating to stay because that's really important too.
• 3:10
  Like let's not make sure we over capitalize because there can be a whole bunch of investment in there that's you're not going to see anything back for it versus well actually we've got to live here.
• 3:21
  So we know the lifestyle that we have.
• 3:23
  We know the configuration of our family, of our house, of how often people come to stay, how big our children are now, how big they might be in five to 10 years time.
• 3:32
  Because that does play a big part in the living space.
• 3:35
  As I would suggest as someone with a couple of bigger humans at home that we still call children, you know, they just take up a bit more room now.
• 3:44
  And so I think that this, this person sounds to me like they're looking to renovate to stay, which is great.
• 3:51
  As we said, let's, let's make that delineation up front and early before you even talk to any builders.
• 3:57
  And the data consistently tells us that they're on the right track, that adding bedrooms and adding bathrooms are the two very crystal clear ways that we can see that value will be added to the property.
• 4:11
  We have seen this before, you know, you will imagine, I'm sure we've all walked into a open home up the road.
• 4:18
  Five bedrooms.
• 4:18
  Wow, that's interesting.
• 4:19
  Let's go have a look at that.
• 4:20
  And it's literally just every room has been turned into a bedroom and there's one tiny little baby kitchen and some sort of weird offshoot of a living room.
• 4:27
  And you think, where does everybody sit?
• 4:29
  Like it's quite a bizarre sort of configuration of a home.
• 4:32
  And so just kind of going willy nilly with just bedrooms and bathrooms.
• 4:36
  Of course, then you start to run into configuration issues, which is what our listener has suggested is that you need living space as well.
• 4:45
  You know, the more people you put into a house, the more room that they need.
• 4:48
  So it's really important to make sure that those are being taken into account, especially if you're looking to stay.
• 4:54
  And if you're thinking about, look, this is a pretty good house for the next 5ish, maybe 10ish years time then think about what you like that lifestyle to look like in 10 years time.
• 5:05
  Know how much space you need to be able to achieve that.
• 5:08
  And then also think about those crystal clear metrics that we do know.
• 5:13
  Move the property market, which is number of bedrooms and number of bathrooms.
• 5:17
  I think it's a really good delineation you've made there.
• 5:20
  On the renoing to sell versus renoing to stay.
• 5:23
  I hadn't thought about it quite that clearly before.
• 5:27
  Would I be right in thinking that that delineation?
• 5:30
  If you're renoing to stay, then yes, of course it's still a financial decision, but it might be something where you're willing to wait a little longer for values to move.
• 5:40
  It's more of a longer term investment.
• 5:42
  Whereas renoing to sell, you might be looking more for an immediate payoff and trying to put in not too much and get as much payback as you can.
• 5:54
  Of course, absolutely.
• 5:55
  So you would make different decisions.
• 5:57
  If you were looking to renovate to sell.
• 6:01
  As an example, you would want to make the space as neutral as possible.
• 6:05
  So you would want to make it where any buyer walking in could see themselves in your home go, oh, we could put that there, we could add this here, we could do that there.
• 6:14
  And you do that with very basic neutrals, very clean living, perhaps mid range tapware or appliances.
• 6:24
  And you would also think about it from if we are looking for adding the value to sell, we want to make sure that look that, you know those key pieces like bedrooms and bathrooms, that they are really sturdy.
• 6:38
  But how do we do those in the most cost effective way possible?
• 6:41
  If you're looking to stay, you might go, you know what, these are a little bit more of an expensive appliance, but we are going to be using them for 10 years.
• 6:50
  So we don't want to have to replace them after five years.
• 6:54
  We would rather invest a bit more now.
• 6:56
  Know that we are utilizing it, know that that's an investment that we are making for us.
• 7:02
  And so that is something that you're going to get the use out of.
• 7:05
  So it's less of a financial decision, that's more of a lifestyle decision.
• 7:09
  It's the same with house colors.
• 7:11
  You know, if you really always wanted an orange house, then you know you're gonna stay there, then paint your house orange, you know, do you boo.
• 7:19
  But it's probably not the best decision.
• 7:22
  Doesn't matter how much you love orange, if you're looking to paint it and sell it, paint can be a really great cost effective way to be able to Lift a space really quickly, make it look fresh and new
• 7:34
  and really get it ready for sale.
• 7:37
  For sale.
• 7:38
  However, the choices that you would make would be far more neutral than if you are looking for it for you.
• 7:43
  You might choose to have a feature wall, you might choose to have wallpaper, you know, and you might choose something that's a little bit more quirky, more interesting, more fun, something that you love.
• 7:51
  You might do the kids bedrooms up because of their stage in lifestyle as opposed to it just being a spare bedroom.
• 7:59
  So I think all of those things are really important to take into account because you're right, these are financial decisions.
• 8:06
  But again, they're financial decisions for you to utilize, the benefit of, which is very different than a financial decision to make the house look sharp, smart, well put together, clean, crisp, ready to sell, that any buyer could walk
• 8:20
  in and see themselves in your home.
• 8:22
  So you would make two very different sets of decisions when you are thinking about those investments.
• 8:28
  If you're looking for property, start with realestate Co nz, New Zealand's longest standing property site.
• 8:35
  They've been dedicated exclusively to property since 1996.
• 8:40
  That's even before Google.
• 8:42
  Whether you're buying or renting, no other property site gives you as much information.
• 8:48
  The Market Insights feature lets you view the median asking, sale and rental prices in a suburb for over 1, 3 or even 10 years.
• 8:57
  Want to know what a property is worth?
• 8:59
  The estimated sale price range uses the latest sales figures from the real estate industry.
• 9:05
  Scroll to the bottom of a property listing to discover what it sold for in the past, the council valuation and what you can expect to pay for it even before you view it.
• 9:16
  Become the property expert, Download TheRealEstate Co NZ app and make informed decisions fast.
• 9:24
  So if you were looking at it and we strip it back to the finances for now and we've said, okay, we've got the lifestyle part sorted and now we're going to look at it just on the money.
• 9:32
  What are some things that broad problematic generalization almost always add value?
• 9:38
  What are some things which can be a waste of money too?
• 9:41
  Time and time again, data tells us that give or take, anywhere between say 80 to 150 grand, depending on the configuration of your house.
• 9:52
  You're adding a bedroom, you're going to add that amount of value because you're opening up a whole new range of buyers that will see your house as valuable.
• 10:02
  So if you are looking, I think they said we've got a three bedroom home at the moment, they're looking to add a fourth bedroom.
• 10:08
  Fantastic.
• 10:08
  Because you are opening it up to people who want to have a spare bedroom, who want to have a bedroom for each child.
• 10:14
  If they have three children, who perhaps have elderly parents that want to move in and they want to have their own space, or you have a couple that are working from home and they need those offices.
• 10:24
  You know, you've got a podcaster who wants to add a podcast studio to their house, like you would be thinking of.
• 10:29
  Yeah.
• 10:31
  So, you know, you start to open up that broader market, you start to increase the value of your property, and then you start to think, okay, but if there are more than 1, 2, 3, 4 people living in
• 10:43
  this house, what does that living look like?
• 10:46
  Because you did.
• 10:46
  Right.
• 10:47
  And I think this was a really smart question by this listener, is that the living space is really important as well.
• 10:53
  You know, again, if you're gonna have two people who are working from home, and then you've got another couple coming in, or there's four people in a house, you're gonna want a little bit of extra space.
• 11:03
  If you've got a family with older children, they probably want a PlayStation Lounge somewhere away from you, or vice versa.
• 11:11
  If you've got younger children, you want to have a room that they can play and have their toys out, and it's not constantly in the way all the time.
• 11:18
  So you start to open up that market.
• 11:19
  But, of course, the livability of the house is really important as well.
• 11:23
  So good that this got two toilets, but again, adding a third one, if you've got a separate toilet and two bathrooms, fantastic.
• 11:30
  You can have a his or hers.
• 11:31
  If it's like our house, we've got a boys and a girl's bathroom, you know, or you can have adults and children's bathrooms, or, you know, however you choose to configure your lifestyle, it just gives you more options and
• 11:41
  more options increases, typically increases the value of what buyers perceive within your home.
• 11:47
  I feel like, as well, when they were talking about, they don't know whether to extend out or under the house.
• 11:55
  And this one I kind of feel like is hard for us to answer without seeing the house.
• 12:00
  I feel like properties can be super individual in terms of the landscape and the house set up and how it works, how much that would cost.
• 12:06
  But maybe that's the thing of, you know, they say they've had a builder in and they've had advice from one person on which could be more expensive.
• 12:14
  Is this a case where I feel like multiple quotes, maybe?
• 12:17
  Oh, I would.
• 12:18
  I say that with everything.
• 12:19
  If you're going to Lawyers.
• 12:20
  If you're looking to sell your house and wanting to get real estate agents and minimum of three, like, just always get three.
• 12:27
  That is like my number one rule for anything, even the dentist.
• 12:29
  I was looking at changing my dentist and I was like, right, I'm gonna get a quote from like, three of them.
• 12:33
  Because I was like, man, that's gone up recently.
• 12:36
  But I was sort of like, you know, it's exactly that.
• 12:39
  I would, I would highly recommend.
• 12:40
  Great.
• 12:40
  That you've got a builder in, like, I think it's always good to kind of.
• 12:43
  If you're just like, you know, I'm just feeling things out.
• 12:45
  If you're seriously looking at, do I go under, do I go out, do I change my dentist?
• 12:50
  Or, you know, even a property lawyer, you know, have a conversation with a couple of them, see how they structure things, see their fee structures.
• 12:57
  Sometimes we can be a little bit shy, like, oh, but I got this real estate agent that I kind of knew.
• 13:02
  Or I, you know, I kind of know this lawyer, so I sort of want to, you know, be kind.
• 13:06
  They are a business, just like you are making a financial decision.
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  There's nothing.
• 13:11
  I would just say be transparent.
• 13:13
  You don't think you have to hide it from anyone.
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  Because I think the transparency feels more kind of sinister than it needs to.
• 13:19
  You know, if you do know a real estate agent or you do know a lawyer and you kind of get a quote from them.
• 13:23
  Absolutely.
• 13:24
  And just say, hey, look, I'm just getting a couple more in.
• 13:26
  You know, I'm happy to share with you feedback and all the rest of it.
• 13:29
  And that's just making smart decisions for you.
• 13:32
  Because they would make smart decisions.
• 13:34
  That's why they're in business too, you know.
• 13:36
  So I always.
• 13:37
  Yeah, I do think that rule of three is really handy.
• 13:40
  One for all of our lovely listeners to remember when they're thinking about anything.
• 13:44
  Just have a little survey of the market and see what there is out there, Tom, that can offer you and the value that you can get.
• 13:50
  100% agree.
• 13:51
  I mean, people ask me about financial advisors all the time, too, and I'm always the same thing.
• 13:55
  I'm like, at least three.
• 13:56
  I mean, you don't want to make.
• 13:57
  A list of 10.
• 13:58
  That's going to take a long time is too much.
• 14:00
  But three is good, I feel, because you also then get a feel for, you know, and a bit of an amalgamation of what everyone's saying, and you can, you can kind of compare across and have some chats with
• 14:11
  them about what they're Weighing it up based on and you get an idea of how they're making that decision.
• 14:17
  It really helps you patch together a full picture and then feel confident in what you pick.
• 14:21
  Side note, what is up with dentists?
• 14:23
  Why are your mouth bones so expensive?
• 14:26
  Oh, and they have gone crazy in the last year or so.
• 14:30
  I'm like, my Lord.
• 14:31
  I mean, they're so important to look after them.
• 14:33
  Don't get me wrong, I hear you out there, dentist, but wow, mouth bones, you are very expensive.
• 14:40
  I haven't got onto this since we moved.
• 14:42
  We moved two years ago and I still need to find a new dentist.
• 14:45
  And I just, I'm putting it off because it's too hard and it's too expensive.
• 14:48
  Yeah, I hear you, Sister Life admin.
• 14:52
  I'm not good at it.
• 14:54
  Okay, so as they are weighing up these decisions, what would be your sort of bottom line in terms of if there's only one thing they took from this chat, what would you say to help them weigh up this
• 15:05
  decision?
• 15:06
  Oh, one thing to really think about looking at that, am I doing this for financial wanting to sell relatively soon, or am I doing it for my lifestyle?
• 15:14
  And just check that this house still ticks as many boxes as it did the day that you bought it and that it will do if you're looking to stay.
• 15:23
  Just fast forward a little bit of five years and think, what will our family life look like then?
• 15:27
  And is that still before we embark on too much renovation?
• 15:31
  If this is our forever home, which is great, then cool, carry on and go.
• 15:35
  But it's just always that, I think just stop and ask yourself that hard question.
• 15:39
  Have a really good conversation with whoever you're going in with.
• 15:43
  Have that conversation too and just really ask yourselves, is this that we're good with this?
• 15:47
  And then what does that look like for 5 years time?
• 15:49
  And let's make sure we're ticking those boxes as well.
• 15:51
  Of course, stuff happens that you can't plan for, but my goodness, if you just put that little forward lens over a lot of the decisions that we make, it just makes our lives that much easier in the long
• 16:00
  run, is my opinion.
• 16:02
  100% agree.
• 16:03
  Thank you so much.
• 16:04
  Vanessa Williams, Realestate Co NZ if you have more questions.
• 16:08
  Thank you.
• 16:08
  We would love to hear them and rattle through them.
• 16:11
  There's been so much happening in property recently, so let's do a deep dive.
• 16:15
  Askancescook.co.nz is the place to send your email through to give us as much detail as you can and we will rip into it until next time.
• 16:23
  Have a great day.
• 16:26
  This podcast can only give you general information about how things work in most situations.
• 16:31
  It's not individual financial advice.
• 16:34
  If you're after that, a financial advisor.
• 16:36
  Is always the best bet.