Buying a dated apartment and giving it a cosmetic update is a smart way for home buyers to gain an affordable entry-point into an exclusive suburb.
Itâ€™s also a strategy used by flippers to make fast money, and by investors to increase the value of their assets and strengthen their portfolio.
This year on The Block, each team has been given a budget of $220,000 to create lavish apartments within a rundown former boarding house. Winning challenges can also boostÂ budgets by tens of thousands of dollars.
But if youâ€™re renovating an apartment in the real world, chances are you donâ€™t have a Block-sized budget to spend â€“Â and you wonâ€™t necessarily need one, according to renovationÂ experts.
Apartment renovators should plan to spend between 6 and 9 per cent of the value of the property, according to the School of Renovating founder Bernadette Janson. â€śIf theyâ€™re spending more than 9 per cent, they would I think be overcapitalising,â€ť she said.
Directors ofÂ Sydney-basedÂ Living Space ConstructionsÂ Shaun Hanley and Luke Whittington saidÂ their clients spent about 9 per cent of the propertyâ€™s value, or about $85,000 on average.
This figure varies across budget, mid-range and high-end properties, butÂ theÂ eventual buyerÂ is the key factor that affects the spend.
â€śIf someone is after top dollar and theyâ€™re in a nice area, thereâ€™s some things buyers would expect andÂ certain brands they want to seeÂ in a high-end home,â€ť Mr Hanley said.
Buyers in affluent areas expect high-end finishes. Photo: Domain.com.au
Founder of Melbourne-based Property BoostÂ Russell Miles said apartment renovators should keep theÂ budget belowÂ 10 per cent of the propertyâ€™sÂ value, depending on their intentions with the property.
â€śSome people just want to make it an amazing place to live so theyâ€™re happy to spend extra,â€ť he said.
The larger the apartment, the more youâ€™ll need to spend, but costs arenâ€™t always directly proportional to floor space.
Painting walls and replacing flooring wonâ€™t cost as much as renovating expensive rooms such as the kitchen and bathroom.
â€śOnce you go from one bathroom to two bathrooms, thatâ€™s adding to the cost,â€ť Ms Janson said. And with larger surfaces to tile and additional fixtures, bigger bathrooms will cost more.
Removing an internal wallÂ is one of the most expensive apartment changes, as it requiresÂ engineering, demolition, new beams, and repairs toÂ surrounding surfaces. But despite a cost of about $14,000,Â Mr Hanley said it was worth it.
â€śA lot of people want to open the space between the kitchen and the living room,â€ť he said. â€śI believe it increases the value far [more] than the costs of the removal [would be].â€ť
In an apartment, bathrooms are more expensiveÂ to renovate than kitchens, according to MsÂ Janson. â€śYou donâ€™t always have to gut the kitchen and start again, often you can put new doors on, put in new kickboards andÂ replace the benchtops.â€ť
Bathrooms are usually the most expensive room to renovate in an apartment. Photo: Alisa and Lysandra Interiors
Major changes require approval from the owners corporation which can be time-consuming.Â If a property is untenanted while loan repayments continue, delays can be surprisingly costly, accordingÂ to MrÂ Hanley.
â€śTime is money in an investment property,â€ť he said.Â â€śThe builder might be ready to renovate but you might have your apartment waiting for threeÂ months for strata approval.â€ť
Finding the middle groundÂ between scrimping and overcapitalising is the key to a successful flip, according to The Block: Sky High winners Alisa and Lysandra Fraser.
Alisa and Lysandra Fraser kept their target buyer in mind throughout a recent renovation of a Gold Coast penthouse apartment. Photo: Alisa and Lysandra Interiors
â€śWhen it comes to flipping, you need to consider profits versus outlay,â€ťÂ AlisaÂ said.Â â€śYou may be itching to install a natural stone benchtop in the kitchen, but itâ€™s bound to be a big cost.Â You may be better off looking at a different surface that does the same job.
â€śItâ€™s about finding the middle ground, as obviously you want the home to have appeal and add value, but not to the point where itâ€™s an overly expensive journey.â€ť
Fixtures and materials used in a renovation should reflect what buyers in the area want, experts say. Photo: Alisa and Lysandra Interiors
To estimate the sale price of your apartment once itâ€™s renovated, study recently sold apartments of a similar size in the area, looking at the level of finishes in each apartment.
Donâ€™t forget to account for stamp duty to buy the apartment, and agent and marketing fees to sell it.