Buy or Renovate
People that wish to upgrade their lifestyle via their home are faced
with two possibilities: buy a bigger home or renovate your existing
home. The answer isn't all that simple. If you're considering renovating
or an extending option, you firstly need to have a home that lends itself
to renovation or extension and secondly it needs to be in a location
that will reflect and carry the added value of the improvements.
If the neighbourhood or your home doesn't lend itself to the improvement
option, due to a risk of overcapitalisation of the property and/or structurally
the home doesn't allow for extensions, you may need to buy into your
desired lifestyle. Be prepared to pay for this option though. South
Africa has one of the highest property transaction costs in the world
and you should budget about 25% of the value of the buy-sell transaction
into your calculations. E.g. If selling your home for R1 million and
buying a new home for R1 million in a better neighbourhood, be prepared
to lose up to R250 000 on this transaction. See previous articles for
details of these costs.
Think Big, Buy Small
If you bought wisely and bought the smallest house in the most expensive
suburb, the renovation will add much more than the cost of renovating
to the value of your home as it brings it up to par with the neighbourhood.
There are a number of items to consider when planning alterations to
your property. The first is any that will bring your home up to the
average or upper end of properties in your neighbourhood. E.g. if you
have a 2-bedroom house and most others around you are 3-bedroom homes,
adding the third bedroom will add the most value.
The cars we love
Converting carports to garages is a great way to add quick value. You
don't even have to spring for the automated doors to get the benefit
of this upgrade.
Roses and paving
Gardens are often overlooked as not been part of the home's investment
but a landscaped and well-maintained garden is well worth the cost.
Do a garden designing course and learn how to plan your garden and then
either get the experts in or do it slowly over time on your own. Planters
are a win-win as they'll move with you if you ever go.
Items that change the theme of the home can have a huge impact on the
value but may be limited in their appeal and their time duration. E.g.
changing the home to be more French Provencal by putting up shutters
and a new natural colour of paint and some feature paving can do wonders.
But then again, changing anything away from a Tuscany look can only
be good at the moment.
Those sandstone tiles and new kitchen are often a good idea but don't
expect to get the full benefit of the money you spend on these upgraded
kitchen and bathrooms immediately. If you spend R100 000 on these upgrades
you're only likely to see a R70 000 improvement in the value of your
home initially. It does help set your home apart from others when you
do want to sell though, and you should be doing this for your own enjoyment
The last items you should consider are pure luxury items like jacuzzi's
and pool houses etc. Pools themselves don't add much to the value and
some people prefer not to have pools for maintenance and safety reasons.