Real Estate Investor Magazine South Africa March 2014 | Page 34

SMART MOVES

BY TRACEE HARVARD

Upgrade, don’t sell
Advice you didn’t expect to get

E

very now and then as homeowners there
is an itch to change things around,
redecorate the whole house or sell up and
move to another house.
Bill Rawson, Chairman of the Rawson
Property Group recently said in an interview
something that most people wouldn’t have
expected to hear and yet, seeing as he is a
representative of one of the top four real estate
companies in South Africa, perhaps you should
take heed - particularly if you are toying with
the idea of selling your house.
According to Rawson, he candidly stated in
the interview that he had advised many a client
to reconsider selling their home. With the
repo rate what it is and in today’s economy, one
doesn’t know what will happen. Touch wood,
but you could be taken ill or be made redundant.
Not the usual advice to expect from a real estate
agent. However, his reasoning makes sound
sense. “The big problem about taking out a new
bond, even if a substantial deposit is paid, is that
it will usually take a long time, often as much
as 20 years, to pay it off and in that time it is
quite possible, even at today’s low interest rates,
for the home owner to pay twice the original
purchase price by the end of the loan period. For
example, on a R1 million bond at 8.5% taken
over 20 years, the borrower would pay just over
R2 million in total — the interest paid being
higher the actual amount paid for the home,”
Rawson explains.

The alternative is to rather upgrade your
home, or portions of it every few years from
your salary and in time, will see you an increase
in the value of your home. Doing it this way
ensures that you don’t incur such detrimental
financial strain unnecessarily, and saves you
from the unexpected.
The good thing is that when it does come
time to sell, you will have a reason to smile.
If done smartly when you sell your house, you
could get as much as 35&-40% more than the
asking price when you do decide to sell and the
market is of course favourable. This is according
to Rawson.
For the sake of this article, we will focus on
improving your outdoor area of your home, with
an eye of increasing the value of your property
in the long term.
According to Adrian Goslett, CEO of RE/
MAX Properties, from a financial perspective,
investing in your outside space will increase the
appeal of your home and increase the resale value.
Some homes don’t give too much attention to the
outside area of a home, preferring to improve the
kitchen or bathroom first but the outside area
if decorated, restructured and designed in an
attractive way, will soon be one of the areas that
will find family and friends gravitating to on a
regular basis: whether it is new deck, a fresh lick
of paint in a different colour on a garden wall;
stone water features; a gazebo; a green house; a

Before: A house in need of a bit of a make over

32

March 2014 SA Real Estate Investor

swimming pool; an entertainment or braai area etc
are all options you could consider to help upgrade
your home, rather than selling it.
Any of these upgrade options or a combination
to your outside area could in the future help you
recoup some of the cost of any installation in the
first place. According to Goslett, this could be
between 60% and 90%. Sounds pretty impressive.
The other highlight to this option to upgrade
rather than sell, is that to increase the aesthetics
of your home both inside and out, will not only
appeal to future potential buyers, it can also help
to sell your home a lot sooner as it will appeal to
many who are looking to buy. People love spaces
with good energy and flow. If you look at investing
in your outside space as a means of getting high
returns in the future, you won’t go wrong.
However, increasing the value of your
property will only be realised once the property
is sold, but in the meantime can be enjoyed by
family and friends.
Besides the obvious relaxation and stress
relieving nature of an outdoor area that becomes
an integral part and flow of the home, Goslett also
mentions that in a world where saving on energy
and water costs, establishing a patio or anything
that takes up ground will serve to lower the use of
water as well as the cost of it.

RESOURCES

Rawson, RE/MAX

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