One of the golden rules of real estate is not to overcapitalise on renovations. There is an upper limit to a house's value, no matter how grand or elaborate the refurbishment.

Often the market will pay as much, or almost as much, for an unrenovated property. This is most likely to happen when price is critical to buyers and they are prepared to do a lot of the work themselves.

The other factor is personal taste. Many buyers prefer to do their own decorating.

The more expensive the suburb, the more scope there is to make a profit. The market for a "turnkey", or finished, job is people who are time poor or useless with their hands. This often translates to IT or banking executives who have plenty of money or borrowing power and want an instant lifestyle so they can start enjoying their scant leisure hours.

Archicentre, the home advisory service of the Royal Australian Institute of Architects, is establishing an Internet program to assist renovators to make commercially sensible decisions. The program, accessible through Archicentre's Web site, presents a number of scenarios to make investors aware of the traps and pitfalls of renovating.

Archicentre's state manager, David Lawrence, says that many people invest in property without a strategy or any idea of renovation and maintenance costs.

"Some actually devalue their investments with poorly conceived designs or inappropriate materials, and they end up with a negative cashflow and poor reselling options," he says.

Lawrence says that many baby boomers are buying homes needing renovation in order to gain capital on their resale when they move to smaller or assisted accommodation. "The renovation decisions they make now will impact on the resale value and the extent of their future retirement funds," he says. "The success of an investment property depends on a wise choice of location and recognising the potential of the existing structure.

"Every step of the way, there is a need to keep a close watch on costs and manage the project carefully. The briefing, contracting and management of tradespeople is a crucial part of securing a good return."

Visitors to the Archicentre website can look at "before" and "after" examples of renovations and listen to audio presentations on Archicentre's design report service. The site also advises on how to work with an architect and use professional advice and provides a guide on the costs of renovation.

An Archicentre architect will provide a renovation feasibility report on a property for a fee of $715. This includes conceptual design drawings, an opinion of likely costs and comments on council issues. The client then decides whether to commission the architect for a full design.