Renovating for Profit in Perth: The Numbers to Check First

A renovation makes a profit only if the finished home sells for more than the purchase price, renovation costs, holding costs and selling costs combined. Most of that profit is decided on the day you buy: how far below the street’s top price you paid. Before you start, find the street ceiling from recent sales, budget backwards from it, and get an appraisal of the home both as it is and after the work.

How do you work out if a renovation will be profitable?

Start with the likely sale price after renovation, based on comparable sales in the same street or pocket. Subtract:

• the purchase price and buying costs, including transfer duty and settlement fees
• renovation costs, with a contingency of at least 10% to 20%
• holding costs: loan interest, rates, insurance and utilities while you work
• selling costs: commission, marketing and settlement (see the cost of selling a house in Perth)
• any tax payable on the profit

If the margin is thin before you start, the project carries risk you are not being paid for.

Which renovations add the most value in Perth?

• opening living areas to outdoor spaces; Perth buyers value indoor-outdoor living
• updating kitchens and bathrooms to a clean, modern standard, without luxury overspend
• adding parking, storage or a usable extra bedroom where the layout allows
• street appeal: facade, landscaping and entry
• in character suburbs such as Subiaco and Shenton Park, sympathetic restoration

What renovations lose money?

• spending past the street’s ceiling price
• very personal design choices
• removing bedrooms
• budget finishes in prestige suburbs
• work done without the required approvals

Do you need council approval to renovate in WA?

Many renovations need a building permit from the local council, and some need planning approval, especially in heritage areas. Structural changes, extensions, decks above certain heights and pools usually need approval. Check with your council and use registered builders and licensed trades. Unapproved work can delay a sale and reduce offers when a buyer’s inspector finds it.

How long should a renovation take?

As short as practical: every month adds holding costs and market risk. Lock in trades and materials before settlement where you can, and plan the sale campaign before the work finishes.

Is it better to renovate or sell as is?

Sometimes selling as is reaches renovators who will pay well for the opportunity. Compare both with an agent: an appraisal as is and a realistic after-renovation price. If the difference does not comfortably exceed your costs and risk, sell as is. For a sale without renovating, see our guide to preparing your home for sale.

What about tax on renovation profits?

Tax depends on whether the property was your home, an investment or bought to renovate and sell, which the ATO may treat as business income. Get advice from your accountant before you buy, not after you sell.

Request a free appraisal and we will give you as-is and after-renovation estimates based on comparable sales.

Frequently asked questions

What renovation adds the most value?

In Perth, connecting living areas to outdoor spaces, and bringing kitchens and bathrooms to a clean modern standard, are the most reliable.

How much contingency should I allow?

At least 10% to 20% of the renovation budget, more for older homes.

Do I need approval for a renovation in WA?

Many renovations need a building permit from your local council. Check before you start.

Is it worth renovating before selling?

Only if the expected price increase clearly exceeds the full cost and risk. Often presentation is the better investment.