Waikato wide call: 027 935 5435 | Email us: info@kmh.co.nz

Renovations and Over-Captialising

When you look at your current home, you may be able to see its amazing potential. You may look at interior design magazines and see the similarities between the featured homes and your own - you can see the chic, modern home, your old, tired villa is yearning to be.
It may have ‘great bones’ and could potentially be your dream home in the making. The prospect of transforming your home into somewhere you see yourselves making a permanent life is extremely exciting. 
Even if you aren’t planning on the house becoming your forever home - maybe you plan to rent it or sell, or maybe the house is your first home on the property ladder. Whatever your reasoning behind wanting to make improvements - property doesn’t come cheap, so it makes sense to maximise your investment as much as you can.
Put simply over capitalising is when someone spends more money on their home than it is worth in the long run - for example spending $50,000 on something that will only add $30,000 of value to the property.  The cost of the renovations outweighs the value it adds to the property.
While most of the time there is long term value to under-taking renovations, below we suggest some good strategies for avoiding the pitfalls that can lead to over-capitalising. 


A good starting point is to have your house independently valued. Housing markets fluctuate and prices may have changed since you bought the property. 
Knowing how much your property is currently worth will be a good place to start planning your budget. 
In addition to your property, it’s important to take surrounding homes into account. Neighbourhoods will generally have a ceiling value, which is a threshold that buyers and renters are willing to pay to move in.
If your ultimate goal is to attract tenants or home buyers, spending a small fortune to push up the value of your home won’t do you much good if it’s located in an area where home seekers are unwilling to pay a higher price.
Having a valuation will give you some of this information and the valuer will compare resent sale prices for similar homes in your area as part of the valuation process. This is also a factor that the banks will look at when considering any lending for the renovation costs.


It is essential to create a realistic budget. If you start your project without a firm budget in mind you will easily slip into overspending.
Once you have your value and budget formalised you can then focus on organising finances and planning renovations that fit within those limitations. 
In setting an accurate budget, discuss your ideas with a knowledgeable builder who has good insights into the current price of materials and labour.  

Be Strategic and Don’t Make it Personal 

If you are wanting to renovate your family home, it can be easy to get personally attached to the changes you are making.
While it is important to create a home that is well made and comfortable, it’s also wise to think about features that make financial sense and appeal to a wide variety of tastes. You don’t want to push buyers away with quirky or high maintenance features. Even simple things like garish or bright wall colours can push home seekers away if they can’t imagine themselves in that space. 
Keeping spaces as multifunctional as possible will always stand you in good stead - putting in features like floor to ceiling bookshelves in the spare room, will limit the usability of that room for any future owners or renters. Be thoughtful about which renovations will add the most value to your home - the usual favourites are modernised kitchens, bathrooms and outdoor living spaces.  
While most home owners undertake renovations for lifestyle reasons, it’s always wise to have a long term view of the work you are doing. It can often be a fine line between making your home more desirable and putting in more money than you can recover later on. 
If you are looking to renovate in the Cambridge or Waikato regions, Kit-Markin are available to give you no-obligation advice, ideas and budget estimates to help you maximise your return on potential renovation work, without over-capitalising on the work.