Valuable property add-ons

In today’s competitive real estate environment, renovations or additions to a property can add value and give a homeowner an advantage over other sellers in a particular area, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that some homeowners may have originally purchased a property with the initial intention of renovating or building on, while others may have bought a property that was perfect for them at the time, but now no longer meets the requirements of their growing family or changing circumstances.

“Whatever the situation may be,” says Goslett, “It is important that the renovations or additions are undertaken in the correct manner and homeowners do not attempt to complete the project themselves, unless qualified to do so. If corners are cut and the work is done cheaply it could have the opposite effect to the desired result. Badly completed renovations can cost far more to rectify, than if the job was completed in the right way from the start. On the other hand if the property owner over-capitalises on the renovations they undertake, they will run the risk of losing money rather than adding value to their investment. Knowing which additions will add value and which won’t also plays a vital role in deciding whether or not to look at renovation options. A homeowner will need to do their research before they spend money unnecessarily on costly upgrades, especially if the reason for the renovation is specifically for resale purposes.”

Determine the home’s current value

According to Goslett, when deciding whether the investment is worthwhile or not, the first step is to determine what amount of money can be spent on the renovation or addition without the risk of over-capitalising. He notes that this figure will largely be determined by the location of the home and the home’s current value.  Although there will be slight variations to the house prices in an area, most suburbs will have an average price range. If the amount spent on the addition is close to or greater than the difference between what the property was bought for and what it can be sold for in the current market, then it may be better to leave the property as it is. “If homes in a particular neighbourhood are selling for R500 000 and the homeowner spends R200 000 on improvements, they may not be able to necessarily sell their home for R700 000,” says Goslett.

Stay within the set budget

Once the homeowner has determined the value of their property, they will be able to set a project budget bearing in mind that the cost of a renovation project should not exceed 25% of the current value of the home. “When determining a project budget, the homeowner will want a cushioning of least 10% for any unexpected overruns in cost. To ensure maximum investment benefit, the homeowner must set a budget and stay within the confines of that budget,” says Goslett. “The process may require a fair amount of planning and research with regard to the various costs involved and materials needed, however, it is far better to have a financial strategy before the project starts than to run out of money midway through.”

Research area trends

While there are general additions or renovations that will add value to a home in any area, such as security upgrades or kitchen and bathroom renovations, which remain the most popular rooms in a home to remodel, it is important to research trends that are specific to the area.

Certain additions will appeal to a different demographic of buyer, so it is important to determine the predominant buyer profile in the area and specific features they are attracted to. For example, family buyers in upmarket areas such as the Sandton suburbs are often looking for attractive homes with staff accommodation. Entertainment and living areas have also become important with many buyers looking for properties with covered patios and built-in-braai facilities. “Homes with lifestyle and entertainment areas can sell for around 10% to 15% more than homes without, depending on the area the home is situated in,” says Goslett. He notes that consulting with a real estate professional with working knowledge of the area will be very useful in gaining this type of information, along with gathering information from property websites and newspapers.

“While buying property should be viewed as a long term investment option, very few homeowners will remain in the same house for their entire lifetime. It is for this reason that changes to a home and the affects these will have on the value of that home should be very carefully considered,” concludes Goslett.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    • 17 Apr 2018
      The recent interest rate cut has stoked the coals in the first-time buyer’s market. At least for the next two months until the next interest rate announcement, homeowners are guaranteed lower monthly instalments than in the previous quarter. But, is it wise to take out a 100% bond just to enter the property market while interest rates are low?
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us