Should you invest in renovations on your home and, if so, what kinds of alterations should be made? How can you avoid over-investing in a property?
And is it worthwhile buying an older ‘fixer-upper’ residential property?
According to Jonathan Davies, manager of the Pam Golding Properties Hyde Park office, many homeowners and would-be residential property investors find themselves asking such questions regarding older residential properties.
“The decision as to whether to invest in developing a residential property is of course entirely dependent on individual circumstances and preferences,” he said. “Building is certainly an expensive business today, and the decision as to whether to undertake extensive renovations should therefore not be taken lightly.”
“However, there is usually a strong argument for investing in alterations to a home, as these are likely to add value to what is the largest investment you are ever likely to make. With careful planning, developing a well-situated property over time can make sound financial sense, as it optimises the investment resulting in improved property prices. There is also much one can do to improve one’s property that does not require a massive outlay in financial resources.”
“It is a good idea to obtain the advice of an experienced and trusted property agent who can provide sound guidance to clients regarding investing in renovations, and assist them to make informed decisions in this regard,” said Davies.
“Many younger families find that purchasing a ‘fixer-upper’ enables them to afford a property in a more upmarket area than they would otherwise be able to afford. They are able to invest in the renovations they desire over time and are able to develop their properties into something highly personal and special. Some investors, on the other hand, specialise in purchasing and restoring older homes, achieving good returns by returning refurbished properties to market at significantly higher prices.”
Pam Golding’s Jason Shaw said that refurbishing can be the way to go with regard to many older properties, although he does cite certain caveats: “The homeowner or homeseeker should carefully assess what levels of investment a particular property requires in order to improve its value and avoid the possibility of over-investing.”
“Ascertain exactly what needs fixing or modernising, what you would like to alter and what this is likely to cost,” Shaw said. “Consider whether you will have access to the necessary funding to implement your refurbishment plan. Some banks offer flexi home bonds that will allow you to borrow the necessary funds from your bond to further develop your property.”
“It is always a good idea to thoroughly assess a neighbourhood before purchasing a ‘fixer-upper’,” added Shaw. “Much like any other property, undertake some research into the area to ensure that it is a sound one to invest in before you buy.”
“If you own an existing home, ascertain what homes like yours in the area are currently fetching on the property market. This will assist you in gaining an idea of what your investment ceiling for renovations should be. You do not want to spend millions making changes to your home if the top prices within the suburb won’t support your selling price when it comes time to sell your property. When doing alterations be sure to obtain the necessary approvals from your local authority.”
“Should local residents be undertaking alterations on their homes, it is usually a good indication that they have faith in the future of their neighbourhood. We have observed that there is a great deal of building currently taking place in many of Gauteng’s more established suburbs, and this is usually a positive sign that residents have confidence in their investment and that the suburb is undergoing a rejuvenation.”
Just what renovations are likely to improve the marketability of you home? According to Shaw, most buyers appreciate modern kitchens and bathrooms, so these can be particularly important to renovate in the older home.
“In addition, first impressions are always critical to home seekers, so alterations that add to the overall appeal and marketability of the home are also to be encouraged. These could include simply giving your home a good lick of paint through to adding a well-placed swimming pool.”
Shaw says that a few examples of value-adding alterations include:
- For many a spacious modern, practical kitchen is a must. Consider how you can update yours.
- Many home seekers insist on modern, well-designed and spotless bathrooms.
- A loft room can be developed to add a relatively affordable bedroom or study.
- A garage can be converted into a cottage, bedroom or office.
- Convert domestic quarters into a self-contained flat or cottage that can accommodate guests or be rented out to assist to cover the bond.
- Build a patio with built-in braai and roof or retractable cover, allowing maximum advantage to be taken of our country’s superb climate.
- Consider adding air-conditioning or heating to improve the internal climate of the home, and skylights or larger windows in rooms that are poorly illuminated.
Pam Golding points out that while renovations can be expensive, many homeowners choose to treat the development of their properties as phased projects in which they make alterations over a period of time, perhaps concentrating on one aspect of the home a year.
“It should also be noted that there are ways to spruce up your property without it having to cost a fortune. For example, the garden and verge create an important impression on visitors and can be developed by the homeowner at a reasonable cost, particularly if they do it themselves and use plant cuttings from friends to propagate plants. In addition, poorly placed plants can usually be transplanted to more suitable sites within the garden.”
“Investing in renovations on a well situated home is rarely a waste and has the additional advantage of making your environment more comfortable, appealing, and closer to that dream home you always wished to own,” Davis said.