Future Proof Your Design to Avoid Overcapitalising

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Our Managing Director, Brett Churcher, has regular conversations with our clients about master planning and future proofing designs to avoid overcapitalising renovations and new home builds. He explains it like this:

“Ultimately, when it comes to avoiding overcapitalising on your home, it is about gaining an understanding of construction costs and working out whether the clients’ expectations of their finished home are achievable within their budget and then how that budget will match the end value of the home.

I think about it as though it’s my money and clients value that. They don’t want to get caught out overcapitalising and losing money on their home.”

Ultimately, it comes down to asking what is the best thing we can do to maximise the value of the home and looking at some of the causes of overcapitalisation.

Consider your plans

Overcapitalising on your home becomes an issue, firstly, if you are borrowing money from the bank for your renovation or build and then again when you are selling your home.

If you are building your forever home and plan on staying there for a long time, then overcapitalising isn’t as big an issue, as you aren’t looking for an immediate return on your investment.

If you have a more short-term plan of renovating to sell, then you need to seriously look at whether you are investing more money than you should in your home.

Take a look at the market

The risk of overcapitalising when building or renovating does vary depending on your postcode. In some areas a fifth bedroom will add $250,000 to the value of your home, so investing the additional money to add that bedroom might be worth it.

In others, that extra bedroom will probably cause your home to sit on the market for longer, if you intend to sell.

The other determining factors in the market are extra features such as a killer view. You can have two homes in the same street, one which has a view and one which doesn’t. The home with the view will likely have a greater valuation and more wiggle room for overcapitalising renovations.

This is the reason why we do a full market analysis for every client.

“We bring the business case in early before we even start designing. Ultimately, it’s up to the client, but we are very open and honest and if we think that the home they want is not going to give them a return in the market, then we will tell them that and suggest a scaled back version,” explains Brett.

Future proofing your renovation

We call it a backup plan or future proofing your renovation… otherwise known as master planning.

For clients who do have a shorter-term plan, we master plan the home design and build so that they might get 80% of their wish list now and five years down the track they can complete the other 20%… or hand the plans over to the new owners.

We worked with one client who only wanted two bedrooms in their home.

The market in that area favoured four bedroom homes so we future proofed the home with a design that would easily allow the house to be converted into a four bedroom home. It was a win for the client who got what they were looking for in the short term with the flexibility to ensure they didn’t lose money on their investment if they choose to sell in the future.

It’s a lifestyle choice

When it comes down to it, you can have the fancy designer light in your entrance foyer or you can take the family on an overseas holiday.

You can install the tricked-up home entertainment system or you can buy a new car.

These are all items that won’t add value to your home… they are lifestyle choices where you can choose to invest your money into extra features of the home or you can inject that money into other areas of your lifestyle.

Be open with your architect

Everyone has a budget… even if they say they don’t. The best thing you can do is to be open and honest with your architect about what your number is.

We talk very early in the process with our clients about overcapitalising when building so the sooner we know what their budget is and how we can match that to the expectations of their home, the sooner we can avoid unnecessary work and getting too excited about features in a home that they can’t afford.

We aren’t your average architecture firm. As a team, we are passionate about pairing good design with solid market knowledge and analysis.

We have helped countless clients on Sydney’s North Shore and Northern Beaches avoid overcapitalising renovations and home builds.

Contact us to discuss how to avoid overcapitalising on your home and creating a stunning home design that perfectly suits your lifestyle.