5 Simple Ways to Add Equity to Your Home

When it comes to adding equity or value to your home, the commonly used strategy is to renovate. But it’s worth understanding potential buyers in your market and what will appeal to them as well as how you can minimise risks to your property.

With many people spending extra time at home due to the ongoing pandemic, it’s a good time to consider what low-cost and simple improvements you could make that will add genuine value to your property.

It’s also worth speaking to your insurance broker about how any improvements may affect your home and contents insurance. And, if you don’t have this type of cover then it’s a good time to explore your options.

The “sum insured” is the amount you will receive in the event of a claim on your home and contents insurance (minus any excess you owe). Your sum insured amount should be sufficient enough to cover replacement or rebuilding costs for your home, otherwise you’ll risk under-insurance, which could leave you out of pocket.

When you insure your home, you’ll need to calculate the replacement value of the whole structure and associated outbuildings and renovations as accurately as possible. You should consider insuring your home for a sum insured amount that exceeds how much it would cost to rebuild or replace the property at present.

Only insuring your home for its current value might disregard other rebuilding costs that you would have to pay out of pocket, or the potentially increased cost of building materials down the track.

With the array of home improvement programs on television, it’s tempting to opt for ‘gut and replace’ projects that involve significant time and investment. Experts in the area suggest grouping projects into four categories and then deciding which projects will give you the greatest return on investment: basics, street appeal, value-add and personal preference.

The basics include obvious things like having a roof that doesn’t leak and gutters and downpipes that work properly. A good basic structure is what you need to establish before you can consider adding any other features to the house.

The age and structure of your property is one of the main considerations for insurers, so it’s worth investing in the structure and quality construction materials to improve your ability to withstand severe damage and reduce potential rebuilding costs.

Street appeal relates to anything that potential buyers can see from the outside of the home, including lawns and gardens, window coverings, the façade and entrance.

Value-add projects would involve upgrades to those all-important areas of the home: kitchen, bathrooms, additional rooms, outdoor living etc.

When it comes to features that might be specific to your market or area, these could be considered projects of personal preference. They might include a swimming pool, spa, wine cellar or games/entertainment areas.

Depending on your suburb’s susceptibility to crime, you can reduce your risk of theft in and around the home by installing alarm systems, adding dead bolts on doors and windows. This will positively affect your home insurance premium, as will investing in measures to protect your home from bushfires, floods or erosion if these present a risk to your property.

Here are five simple and low-cost options for adding value to your home, which may seem obvious but can often be overlooked when we are focused on the ‘bigger picture’:

1. Painting

A lick of paint on its own is not going to send the value of your home sky-rocketing but keeping your house fresh and using neutral colours are smart ways to attract attention. Try tackling one room at a time to make the job seem easier and minimise disruption. You can always paint the walls yourself and then get in a professional to do the ceilings.

2. Window Treatments

Updating your window treatments is an effective way to transform your home’s style. With so many options now available, there is a value-adding solution for every room of the house whether it’s curtains, blinds, shutters or awnings.

3. Create Street Appeal

First impressions count because they effect the feelings and imaginations of your market. Wouldn’t you rather them imagine an interior of great value that they would want to pay more for? Common areas of focus include painting or rendering the exterior, landscaping, improved fencing, painting and repairing roofs.

4. Refresh Major Rooms

Street appeal may get the buyers into your house, but you need to keep them excited once they step through the front door. Some simple but effective ways to improve your interiors include refreshing the kitchen and bathroom. The kitchen is considered one of the biggest selling points in any house and you can make a significant improvement by replacing cupboards, benchtops, splashback, door handles, taps, lighting, paint and appliances.

5. Create Outdoor Living

Having a comfortable area to sit outside can add significant value to your property and extend on style and feel you have created inside the home. You could consider adding a paved area or deck with covering such as a pergola or awning. Once you have the basic structure you can consider additional features like a pizza oven or fire pit.

Of course, there’s a lot to be said for cleaning, maintenance and repairs. Staying on top of this will also extend the life and value of your home.

Finally, if you’re going to do major work, find out what it’s really going to cost and speak to a real estate agent about whether it’s worth it before you get too far down the track with complex projects.

At the same time it’s worth factoring in how you can improve your home and contents insurance premiums through your renovation work. To ensure you have adequate cover it’s advisable to speak to an insurance expert.

General Advice Warning: The content of this article is general advice only and should not be acted upon without first consulting an industry specialist as it does not take into consideration your personal needs, objectives or financial circumstances.


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