The following is an excerpt from Cherie Barber’s book, Renovating For Profit.
So, we’ve come to the kitchen, which just happens to be the most important room in your home for adding value … no pressure! The heat is on because this room has so many elements and is heavily used every day. Given how hard this room has to work, it shouldn’t be a surprise that a well planned and executed kitchen will add enormous value to a home. Basically, this room is your money maker, according to bank valuers – it’s the one room they pay particular attention to (along with your bathroom). These two rooms also happen to be the most expensive to renovate, and rightly so. They have a lot of stuff in them!
For your kitchen, allocate a budget of no more than 2 per cent of your home’s current property value. Not what you bought the property for, but what it’s worth today. If you don’t have any idea what your property is worth, simply look at real estate websites for local comparable sales.
For example: if your home is currently worth $600,000, your kitchen renovation budget should be no more than $12,000, fully finished, inclusive of all materials, fixtures and fittings and trade labour. Everything, basically! If you’re disciplined enough to stick to this formula, you’ll greatly minimise your chances of overcapitalising.