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Financial Planning Investing in Property

Build, buy or renovate? What makes most financial sense?

Planning and research

If you’re planning an extensive renovation with plenty of structural changes, it may be cheaper to start from scratch or buy elsewhere. You also need to consider the age of the home, its location and the lifestyle offered as part of the decision making.

To kick-start your research, check out the Archicentre website (www.archicentreaustralia.com.au)  for their Cost Guide, which can help you calculate the cost of a home improvement project, a renovation, a new home or a small property development. Archicentre is the building advisory service for the Australian Institute of Architects. Costs can vary and it’s a good idea to keep in mind that renovation costs could blow out due to unforeseen problems that could arise along the way.

One of the advantages of building a new home is you may ask your builder for a ‘fixed price contract’. Once you have a fixed price, you can then compare it to the cost of moving into a bigger home. This will include the difference between the price of the bigger home and your current home and the transfer costs such as stamp duty, legal fees, removalist costs, pest and building inspections and insurance.

Budget for renovations

A renovation is the right choice if you’re happy with your current property and locality and don’t want to move. As an added plus, a renovation won’t involve stamp duty charges and there are no real estate agent fees to contend with. And depending on the nature of the works (and unlike a rebuild), you may not have to move out of your home while the renovation is progressing. You simply work and live around it.

Something else to consider when renovating is that it can potentially be very expensive. Many people also find that renovations can take longer to complete than originally planned – and also cost more.

Cost blow-outs can occur where unexpected problems with the home’s condition arise that need to be fixed. Also many owners tend to make adjustments and additions to the original contract of works with a builder. These adjustments can often hike up the costs as the renovation proceeds.

Securing a number of building quotes and then keeping a lid on costs once the renovation gets underway can produce the best financial outcome for homeowners.


Source: BT

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Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.