Improving the Value of your Property

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John Roberts, CEO of Just Property Group John Roberts, CEO of Just Property Group

Property remains the single largest investment people have but, like everything else in an investment portfolio, it also needs nudging to ensure it maximises the return on investment.

John Roberts, CEO of Just Property Group says the renovations market is a major segment in the building industry and largely unaccounted for due to the “ghost market” where projects are not submitted for approval or put out to tender. Renovations and additions in the residential market contributed 25,6% to the national total of sqm of approved building projects.
 
"The renovations market generally reacts more swiftly to changes in the economy, and in particular house renovations. In the absence of tedious tendering procedures and no requirements for any further approvals from local authorities other than the approval of the building plan, home owners – provided they have sufficient liquidity – are likely to invest in property as soon as the market shows signs of a recovery,” notes Roberts.

With house prices continue declining, many consumers find renovating homes is adding value to their property as the selling of homes is at prices lower than anticipated. During the 12 months to February 2011 the number of m2 approved for home renovations rose by 1,3% compared to February 2010  indicating that this market is becoming popular with homeowners.
 
However, renovations do not always have to be extensive or expensive. Small changes can reap rewards well beyond the initial costs, but critical in achieving that goal is getting the basics right.
 
1) Build an extension:
Well-proportioned extensions in keeping with the home's architecture and design, such as a sunroom or outside entertainment area, can expand the living space with a relatively small capital outlay and be recuperated on sale.
 
2) Redo the kitchen or bathrooms:
These are the two most expensive rooms to renovate and  presenting a home with a modern kitchen and bathrooms exponentially boosts the value. Buyers typically consider these areas first when viewing properties and are willing to pay the premium - often around 10% of the property value - to have modern facilities installed and avoid dealing with it personally.
 
3) Build another bedroom:
Building another bedroom can boost the value 5-10%, especially when the new addition incorporates another bathroom. The addition could be expanded into a self-contained unit either for elderly parents or as a revenue source when rented out.
 
4) Lighten the house:
An interior design trick involves brightening the home to create a more welcoming atmosphere. The entrance hall is the first impression, so incorporating warm and inviting colours draws in potential buyers, while adding a feature piece such as a chandelier, quirky pictures or interesting wallpaper generates an immediate, and often lasting, impression. Also, take the opportunity to modernise light fittings and light switches.
 
5) Add a garage:
Garages are a feature reflective of economic upswings. When the economy is bubbling, new homes tend to include them in their plans, but they are the first feature dropped when the budget is stretched. Hence, building a garage as an investment for the home will be wholly recovered when the property is sold. This is particularly relevant when parking is difficult or security an issue.
 
6) Eco-friendly homes bring in a higher value:
Ecologically-friendly upgrades offer a significant return on investment. From water-saving plumbing fixtures, solar geysers and tankless hot water heaters, investing in the earth can add value to the property. Other options include choosing rapidly-renewable resources for finishes such as bamboo flooring or opting for systems that save on energy costs.
 
7) Add a swimming pool:
South Africa's climate invites entertainment areas and swimming pools. While an expensive investment, its cost can exponentially increase the property's value.
 
8) Invest in the garden, particularly an indigenous one, and boost the curb appeal:
Sprucing up the garden, eradicating dead trees and plants can provide a fresh look to the outside of the home. However, as the world increasingly focuses on environmental issues, including water scarcity and the damage caused by exotic flora, upgrading the garden to indigenous would ensure a competitive advantage.
 
Curb appeal beckons potential buyers into the home so underestimating the importance this area plays in determining the property value is a mistake too often made by owners. Relatively inexpensive improvements can be achieved by lining the walkway with solar-powered lights; ensuring the lawn is growing correctly and planting strategically-placed trees that may provide shade and thus natural cooling near the home.
 
9) Paying attention to flooring:
Flooring is an often forgotten upgrade. The rule of thumb is that the more resilient and long-lasting the new flooring, the greater the expense but also the higher the return on investment. Vinyl flooring and low-end carpeting are at the bottom end of the upgrade spectrum, while wood, tile and natural stone as flooring options add value to the property.
 
10) De-clutter:
If you have lived in a property for more than 10 years, order a skip and de-clutter. As natural hoarders, we accumulate stuff that often gathers dust and detracts from the home's potential. However, the bottom line is that nothing will provide a better return on investment than a little elbow grease to make the house look like new. That means focussing on rarely-cleaned areas like steam-cleaning the carpets; washing the walls and windows; wiping down blinds or washing the curtains and replacing any broken panes of glass.
 
These alterations will ensure the real estate agent can get an accurate assessment of the value and that buyers can feel welcome.
 
As with all building projects, ensure that you have the required local and municipal approvals and get the neighbours’ buy-in before starting.
 
And, finally, always  consider the return on investment in any project. Take into consideration what other similar properties in your neighborhood are selling for and use that as a guide for what you can expect yours to sell for. Often the simplest and cheapest changes such as repainting or adding a simple fence can give you the greatest benefit. 


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