Renovate With Care

Renovations can add value to a property, but only if they are done in the right way, according to Adrian Goslett, CEO of RE/MAX of Southern Africa.  Goslett noted that many homeowners tend to undertake home renovations at great cost but add very little or no value to their property when they decide to sell.  This is why it is important for home owners to research certain aspects before venturing down the renovation path, especially if the renovation is specifically for investment and resale purposes.

Goslett said that one of these elements is the general value of property in the area in which the home is situated.  Although property prices can vary from street to street, most suburbs will have an average sale price.  The homeowner can risk over-capitalising if the cost of renovation vastly outweighs the profit that can be made, if the property is sold at a later stage.  Over-capitalising can actually have the opposite effect and devalue a property.  Its location and condition, especially in comparison to other nearby properties, largely dictate the value of a home.  This means that before they break ground, homeowners should have an idea of property value in the area and the current real estate market.

Property websites and newspapers will give the homeowner some idea of the market trends and prices, however, consulting with a real estate professional specialising in that area will give the homeowner a clearer picture of the market.  An agent will know what current buyers are looking for and at what price.  Different features appeal to different buyers.

Different kinds of renovations could appeal to different buyers that are attracted to the area.  Knowing the particular area's general buyer profile and the features they look for, is essential to undertaking a renovation project that will add the most value.  If the predominant kind of buyer in an area is a business executive wanting low maintenance and lock-up-and-go features, a swimming pool could prove to be more of a hindrance than a value adding element, while a family buyer could see this as a draw card.

Due to the fact that renovation is often an emotional decision, Goslett advised homeowners to have a set budget before starting and to try stick to it as much as possible.  As a rule of thumb, the renovation cost should not be more than 25% of the estimated value of the home.  "Setting a renovation budget will also require the homeowner to do some research regarding the associated costs.  Certain elements may cost more than expected, so this will need to be planned for ahead of time.  A lack of financial planning could result in a poorly completed or half-finished project, either of which could affect the value of the property negatively," Goslett advised.

Some homeowners may be tempted to undertake the renovations themselves to mitigate costs.  However, this is generally not recommended practice unless the homeowner is qualified to do so.  Badly completed DIY renovations can cost far more to rectify.