Residential property in essence evokes an emotional response in the marketplace. What you consider a “creature comfort” or aesthetically pleasing may not appeal to the overall, or average, potential buyer.
Therein lies the risky likelihood of over-capitalising - improving your home beyond resale value, says Rob Roper of Roper & Associates, a property valuations services company In KZN.
He suggests you take into account the following factors:
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Location and suburb demographics
It's no use renovating to high upmarket standards (and expecting the returns) if the affordability of potential buyers lies in the middle-class bracket.
Finishes and fittings
Does the design of the renovations fit into the theme of the home (and surroundings)?
Certain areas in the home where upgrades may provide additional value include:
Kitchen
Keep in mind a potential buyer may appreciate a well thought out kitchen design rather than the expensive finishes (which could be high maintenance and impractical)
Go for the “magic triangle” kitchen design – no leg shall be more than 2.7 metres and the sum of the 3 sides should not be greater than 8 metres
Bathrooms
Keep it simple and practical
If it’s a family bathroom – does it work for the whole family
A main en suite could be a valuable asset
Accommodation
Abundant accommodation tends to lead to over-capitalising on the lower to middle LSM bracket with limited demand because of extended family living/ compound style living not very prevalent in the growing middle class.
Surroundings
Improve the look of your garden and condition of the surrounding works rather than adding a swimming pool – which is a costly outlay (with limited return on investment) and incurs high maintenance costs (something a potential buyer may want to avoid)
However, tread carefully when applying the upgrades, especially if you are considering selling in the near future. Do not apply “fashion or fad” finishes, rather these should apply to a broad base of buyers (colours, design and practicality).
Beware of under-estimating the costs involved in the renovations! And remember an important fact in property valuation: “replacement/ building value does not equal market/ selling value”. Basically in a nutshell this means that you may not necessarily get out what you put in.
But smart renovation can lead to an increase in market value that exceeds the capital outlay. So do your homework and get a good estimate of what your resale value is, before spending more on fixing up your home and then later not being able to get the money back when you sell it.