Count The Cost When Renovating

By Bradley Beer on 31 Oct 2013
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An old saying goes, “A king does not wage a war without first counting the cost” (Paraphrased of course).

So before you wage your renovation war on your property, there are several costs renovators often overlook when checking the feasibility of their renovation job.

When you’ve got a tight budget, the last thing you want to do is to come up against unexpected costs that should have been factored in at the initial planning stage.

Add these eight costs to your renovation checklist to make sure you’ve covered everything.

Pest Damage

The biggest surprise cost that catches a lot of property owners is pest damage.

Prior to the purchase of any property, it’s a must to buy a pest inspection and report. It’ll give you peace of mind knowing termites haven’t already started warring against you and eating your investment property away.

Cost of Approvals

Hopefully you’ll know before you start the work what you want to do with the property. Always check in with the local council to see if some kind of development approval is needed and if associated costs are involved.

Insurance

Before you begin using that crowbar, make sure you have adequate coverage both during and after your renovation. Contact your insurance company who will be able to tell you the extent of your coverage.

Tax Implications

Itching to make your first strike? Make sure to talk to your accountant to ensure all tax factors are considered including a before renovations tax depreciation schedule.

Access to Property

Not having easy access to your property by machinery, delivery trucks and tradespeople will make it costly in terms of time and trips made. Make sure to have your access sorted before starting your work.

Removal of Rubbish

Taking a crowbar and demolition ball to your property means ending up with a lot of rubbish. The bigger the renovation job, the more rubbish. Factor in the cost of removing rubbish from the renovation site and disposing of it.

Holding Costs

Always include additional holding costs as a result of delays. This will include interest and loss of rental income.

Your Time

Account for the time you spend on the renovation job, when you could be working your real job. As economists would put it, this is the lost opportunity cost. It may be better for you to engage a tradesman so you can focus on generating other income. Also consider the time saved by having a professional complete the work.

Adding these not-so-obvious costs to your checklist should help ensure you’re a conquering renovation king or queen, instead of the proverbial fool for running out of money and not being able to complete the job.

About the Author

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation. A depreciation expert with over sixteen years experience in property depreciation and the construction industry, Bradley is a regular keynote speaker and presenter covering depreciation services on television, radio, at conferences and exhibitions Australia-wide. Please contact 1300 728 726 or visit www.bmtqs.com.au

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