What does Overcapitalising Mean?
Overcapitalising means to estimate the value of property too highly. Or, simply making improvements that exceed the value of the property.
Do you constantly re-renovate your room? Have you spent too much already on tweaking your kitchen or bathroom? If your answer is yes, then you’re guilty of overcapitalising.
Australians love renovating. Aussies loves to achieve what they see from reality TV shoes and magazines with such impressive and attractive interiors and landscapes. It is a joy to see that your dream house looks exactly how you’ve been dreaming of. However, you must avoid overcapitalising when it comes to renovating your own property.
Properties Are Not Cheap
Owning a live-in or investment property doesn’t come cheap so it definitely makes sense to maximise your investment as much as you can. . According to Mortgage Choice, most of mortgage holders are immediately planning for renovations. “While renovations can potentially increase the value of a property, our survey results show that the purpose for many Australians is to improve their lifestyle by customizing their home to suit them,” said Ms. Williamson.
“This lifestyle focus was further highlighted by the fact that of those Australians intending to renovate, 15% were looking to renew their outdoor entertainment area first. This was among the top three most popular areas to renovate and followed upgrading the kitchen and bathroom at 28% and 27% of respondents, respectively.”
All in all, avoid overcapitalizing by keeping your renovations modest and within a reasonable budget so you can maximize the value of your home without overestimating the value you will add.