Reno Should Not Cost >10% Of Your Flat Price

[gothique 0]

Hi forumers

Recently bought a flat and looking to renovate it.

My relatives gave me a guideline for budget saying that

1. Renovation should not be more than 10% of your flat price and one of the reasons for this rule is because:

2. You will never be able to get back the $$ for your reno when you sell your house.

Any experienced forumer who has renovated house and also sold your home before, do you agree with this? Is it really true?

Actually I thought that

1. A house with nice renovation will sell better and that people may be willing to pay more cash for a well-renovated home.

2. We're going to stay there for the next minimum 10 years. So should spend more $$ to do up the house properly and use good quality materials so that there is less repair or maintenance to be done in the years to come.

What is your personal experience with the above? Thanks for sharing!!

[zirhk3355 1]

You should never bank on having the reno to fetch a better price for your flat, because you never know what will happen in the future.

Aside from being functional, to me, renovation is purely visual and comfy, so just spend what you feel is ok for your pockets instead of tying it to any other factors, especially like you said, if you want to stay there for long-term.

Edited March 1, 2007 by zirhk3355

[tute 0]

I heard from my agent previously that if reno is done <5 yrs, then the reno value will be included during the valuation. Not sure if this is true. For me when I was looking for my resale flat, I saw a lot of house reno that doesn't suit my taste and ppl are asking a lot of cash on top of valuation for this. Anyway reno is a matter of taste, difficult to tell but personally I prefer a plain flat cause it's cheaper to do renovation without having to hack a lot of things.

Edited March 1, 2007 by tute

[ARCHer 0]

You renovate your place based on your own preferences and taste. Unless the buyer shares similar preferences and taste as you, the buyer is likely to want to do up the way he/she wants. As such, the buyer may even want to hack/get rid of your renovation.

[yuuhuu 0]

I heard from my agent previously that if reno is done <5 yrs, then the reno value will be included during the valuation. Not sure if this is true. For me when I was looking for my resale flat, I saw a lot of house reno that doesn't suit my taste and ppl are asking a lot of cash on top of valuation for this. Anyway reno is a matter of taste, difficult to tell but personally I prefer a plain flat cause it's cheaper to do renovation without having to hack a lot of things.

bro your right.. reno less than 5 years will be considered in the valuation. I used to work in bank for loan and that is a something the valuers always ask when considering valuation.

[reismione 0]

tat's a nice guideline to have.

however, do take note of the sky high prices of housing now. 10% of 300k is 30k leh. does this include furnishing too? *grin*

my cousin bought a resale 5 rm about 300odd k but spent close to 50k on reno. hopefully tat includes furnishing. :S

[gothique 0]

Hello guys

thanks for the feedback. i just wonder if 10% of price is too conservative? I guess it's IMPOSSIBLE for that to include furniture. maybe just furnishing ah.

Yes i also heard about the renovation being a factor in the valuation price. but i didn't know about the "shelf life" of renovation = 5 years.

Do you feel that it is worth it so spend a lot on the reno seeing that after 5 years = no market value???! OMG!

Personally for resale i would also look for plain flat so that i can do my own reno to suit my taste and preference. but are there people who look for fully renovated flat so that no need the hassle of doing own reno?

[pisces 0]

I would agree with the others.

Reno is upto ones preference and taste and should not be associated with resale. I will narrate my resale falt buying experience to cite an example.

I recently bought a resale flat which was in quite good condition. I could have just painted the place, done a chemical wash , polished the parquet floor and moved in, the cost would be around 2K only. However some of the items were not upto my personal preference and I am spending around 13-14K for reno. I asked contractor to remove perfectly good built in wardrobes just because I did not like the color used in the formica.

When ppl are looking for a resale flat the renovation does play a useful role in giving the buyer a feel of the house in the first viewing. But during further viewings the buyer will come down to the basics like location of the flat ,floor, amenties and the basic condition of the flat. Reno would not be the most important thing for most buyers, in fact it could be a hindrance if it does not suit the buyers taste.

There is also a possibility that you and the buyer may share the same taste but unlike 'yuuhuu's post above I don’t think reno is considered during valuation.

When I was looking place I saw a 5 yr old flat with a beautiful renovation of around 50K But owner was asking only 5K extra above valuation.

Lastly, I don’t agree to the 10% rule. 10 years is a long time to live in a house, you should do renovation keeping in mind that you will be peaceful and comfortable when you reach home after a tiring day at work.

[zirhk3355 1]

bro your right.. reno less than 5 years will be considered in the valuation. I used to work in bank for loan and that is a something the valuers always ask when considering valuation.

That's interesting; would you be so kind to provide more info on how they value the reno? If not based on the full value of the reno (which no one can verify after 5 yrs), how do they factor in depreciation?

And I guess all new flats' owners can kiss their reno's money goodbye, since they can only sell the flat after 5 yrs.

[korea 0]

bro your right.. reno less than 5 years will be considered in the valuation. I used to work in bank for loan and that is a something the valuers always ask when considering valuation.

really! reno less than 5 years can be included in the valuation. wow... good leh.

[zirhk3355 1]

Do you feel that it is worth it so spend a lot on the reno seeing that after 5 years = no market value???! OMG!

Personally for resale i would also look for plain flat so that i can do my own reno to suit my taste and preference. but are there people who look for fully renovated flat so that no need the hassle of doing own reno?

Well, some things in life cannot be valued by the dollar sign all the time. Eg branded products, white gold/platinium jewelleries, etc. which all depreciate to a very low value or no value at all. Thus we should look at reno from the same POV that we are spending money for our luxury/comfort, not as a plus-point to make our flat more sell'able or even fetch higher price.

And like above said, if the reno is unique and only cater to the taste of certain people, then it actually be a hindrance as it narrows the scope of buyers that you can target.

[korea 0]

And I guess all new flats' owners can kiss their reno's money goodbye, since they can only sell the flat after 5 yrs.

i called hdb before and hdb said you can sell your flat when your flat reaches exactly 5 years and 1 day. e.g., you bought your flat on 1 jan 2007 and you can sell on 2 jan 2012.

[zirhk3355 1]

i called hdb before and hdb said you can sell your flat when your flat reaches exactly 5 years and 1 day. e.g., you bought your flat on 1 jan 2007 and you can sell on 2 jan 2012.

Wah imagine if your reno is only 5 yrs and 1 day old and the valuer kept strictly to the 5-yr deadline, then even more 'ai-wan' right??

But I guess it won't totally be no value straight after 5 yrs exactly lah; eg carpentry, flooring etc all can last more than 5 yrs woh, how can be no value de?? Maybe it means after 5 yrs the depreciation rate for reno drops drastically.

[gothique 0]

after thinking about it... i think reno is really for yourself and no one else... and there is not a lot of value to it. cuz at the moment, i am thinking of reno ideas and i ask all my friends.. i get mixed reactions from all. and so i realise that different people really got very different taste man.

so conclusion is... it will be quite difficult to "value" your reno. cuz even if u spend 100k on it and you have a marble floor that can last for the next 20 years, chances are that the next buyer won't like your reno and will not be willing to pay a premium for a so-called well renovated flat...

and by the way.. i guess that is why ID and contractor can earn mah! cuz new homeowners always want to renovate the house even though the existing ones can use. haha.