Article taken from Property 24

It is by now common knowledge that spending too much on your house’s upgrades can lead to overcapitalisation, which will result in you not fully recouping the costs of your outlay when you sell.

But what are necessary upgrades and which ones can be classified as imprudent upgrades? Put differently, how much should you spend to increase the value of your home when you sell?

On the one hand, the reasons for this are general and apply to all properties, but they are also area-specific.

Jonathan Davies, manager for Pam Golding Properties (PGP) Hyde Park, says unnecessary upgrades would be upgrades where the value is often hidden to the buyer. “For example, very expensive sound systems are often overlooked by buyers as they do not understand or see the amount of work and costs that go into them. They simply see a sound system but struggle to attach the value to it.

“The same can be said of very expensive paint. The seller feels the expense and loads the price but the buyer only sees paint.”

Jason Rohde, CEO of Sotheby’s International Realty (South Africa), says some renovations are likely to even actually decrease the value of a property and make it more difficult to sell. “For instance, adding a swimming pool to a small property in a cluster development adds little value because many people who buy cluster homes buy them for the lock-up-and-go convenience and do not want the extra responsibility that comes with owning a pool.”

“The general rule is that you should not spend more than 25% of the value of your home on renovations.”

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Article taken from IOL Property

Buying a property is a significant milestone in anyone's investment and personal life. It symbolises independence, a commitment to putting down roots in one place and a rite of passage to financial responsibility.

However, there is the question: "Am I ready to purchase a property and accept responsibility for my decision?"

The answer is not as daunting as it may appear. Lending criteria from the banks remain tight as financial institutions take into account the legal ramifications of the National Credit Act and lick their wounds in the wake of the international economic meltdown and recession.

Yet bonds are being granted and, with a little preparation and forethought, people are acquiring their dream properties.

The first step involves studiously saving towards a deposit and some of the other auxiliary costs associated with purchasing a property - transfer duties, attorney's fees, bond registration and moving costs. The banks want to know that the person to whom they are lending capital has also assumed risk in that financial decision.

Simply said, they want to see homeowners put down money towards the property and show a commitment to their investment decision. The higher the deposit, the lower the bank's risk and that will play a role in the interest rate you can secure on the mortgage.

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