Text from this article – Living Design Articles
Renovate and Profit – Revamp for max return
Fancy yourself an amateur property developer or
just want to ensure that your alterations add to the
resale value of your home? Before you call in the
builders, consider this expert advice on how to
renovate for profit.
There’s definitely money to be made from
renovating a property, whether you make alterations
to your own home or to a speculative buy that you
plan to sell on for a profit and not live in yourself –
but it’s important not to confuse the two.
“The biggest mistake people make when renovating
purely for resale is to think about what they want,
rather than about what the market wants,” says
Peter van Wyk of Maxim Property Development
Group that renovates properties in the Cape.
Needles to say mistakes like this can be costly; to
help you avoid common pitfalls, we asked the
experts for advice on how to revamp a house for
Buy the Right Property.
“If you want to sell well, buy well.” says project
manager Wendy Holmes of Living Design, who has
been renovating properties professionally since
1975. “It’s no good paying top dollar for a house if
once you’ve renovated it, the selling price will have
to be way over the price of the most expensive
property in the area.”
Her advice is to find out what the highest-priced
homes in an area sell for as well as what the demand
for properties is like. “Buy the ugliest house in the
best neighbourhood because no one else will want it
and you’ll get it for a good price.”
Once you have this information, you can work out
whether a renovation is a financially viable option.
Developer Peter van Wyk explains: “Take the
average selling price of similar properties in the area
and deduce what the house you’d like to buy is
worth; the difference is what you could spend on the
renovation – but don’t forget to take whatever profit
you would like to make into account.”
Decorator Shelly Sacranie, owner of the decor shop
Artefect, points out that if you choose a property
that’s under capitalised you may be able to improve
its value just by painting the walls and reducing the
flooring or by adding space, such as turning a three
bedroom house into a five bedroom house.
When considering doing major alterations or building
on additions, Wendy points out that it’s important to
purchase a property with the “right bones” – one
with a square or rectangular footprint will often be
easiest to work with – and cautions against buying a
house that’s been badly renovated already.
As any major building work will requrie plans to be
drawn up by a professional and approved by the
relevant municipal authorities, Andre Rademeyer of
ST&AR Architects suggests that it’s a good idea to
consult an architect before you buy the property.