Beware the bargain – look to improve, not overcapitalise
Don’t buy a house just because it’s a bargain – you might end up with more than you bargained for, warns Bruce Swain, regional director of RE/MAX of Southern Africa.
Buying a property that is in less than perfect condition can save money, and can certainly be an opportunity to put your personal touch to the style of your new home, but Swains says in a Cape Town interview there are many challenges to renovating that should not be overlooked and owners should be realistic about what they’re taking on.
If the property is simply run down on the surface, often a coat of paint, some new fittings and routine maintenance is all it may need to bring it up to standard and increase its value. But more often than not, dilapidated properties require considerably more than a good dose of TLC to improve them, and potential owners would be wise to research the project first before committing to the property.
“Some renovations just aren’t worth the money,” says Swain. “The first step to take before even considering making improvements is to seek advice from the professionals. The risk of overcapitalising is very real, and potential buyers should consult an experienced local agent to evaluate property values in the area before taking on renovations. If the plan is to improve the property and move take occupation in the next two or three years, they should think carefully about whether it’s worth the investment. If they intend living in the home for an extended period, the renovation cost is likely to be absorbed by the ongoing capital growth over that period.”
If the house needs structural changes, advice from a surveyor and an architect would be essential to determine the structural standing and potential of the property. Extensive building renovations also need to be passed by the local council for planning permission. By law any plans also need to be approved by the owners of the neighbouring properties, particularly if the structural changes potentially affect them, as in the case of interrupted views or additional windows overlooking their property.
Buyers should also consider a contracting a professional to check the plumbing and electrical wiring of a property, as well ensuring all wooden structures of free of damaging pests.
A new kitchen, bathrooms, extra rooms, an additional garage, a patio or deck, paving and a re-landscaped garden are all popular improvements that can add value to a property, provided the changes are in keeping with the style of the home.
“All of these things will add to your lifestyle and the saleability of the property, but there’re no guarantees that every improvement will add to its value. It’s important to remember why you’re renovating. The key is if it doesn’t improve your personal comfort, increase saleability and boost property value, don’t do it,” says Swain.
When buying a property, don’t leap for the lowest price. Stick to your criteria and find a home that meets your needs, wants and budget limitations. Renovating a home is no simple task – it is often financially and psychologically stressful and, unless well researched and planned, can be a disaster.