Should you ren­o­vate or buy a new home?

Lesotho Times - - Property -

PYOU have lived in a home for a few years, love the area and are happy with where are, but the home no longer meets the re­quire­ments of a grow­ing fam­ily. It’s time to make a de­ci­sion - do you add on to the home you are in or buy an­other prop­erty that bet­ter suits your needs?

Ac­cord­ing to Adrian Goslett, CEO of RE/ MAX of South­ern Africa, the de­ci­sion to move or ren­o­vate is one that many South African home­own­ers will face at some stage of their lives. He notes that it is a de­ci­sion that will largely be determined by var­i­ous key fac­tors such as whether the ex­ist­ing home has the nec­es­sary space for ad­di­tional rooms needed to ac­com­mo­date the fam­ily’s chang­ing sit­u­a­tion. There is also the ques­tion of af­ford­abil­ity and which choice makes the most fi­nan­cial sense for the home­owner’s pocket.

“There is no right an­swer to the ques­tion as the de­cid­ing fac­tors will be unique to the in­di­vid­u­als and their spe­cific sit­u­a­tion, for each home­owner the choice will have to fit their life­style and cir­cum­stances. Many home­own­ers aim to re­main in their home for a very long time and there­fore pur­chase a prop­erty that they will be able to al­ter as their bud­get al­lows or their needs change. While other buy­ers pur­chase a home that is right for them at the time, but know that as soon as their sit­u­a­tion changes they will have to re­lo­cate,” says Goslett.

There are ad­van­tages and dis­ad­van­tages to ei­ther op­tion, but there are steps that home­own­ers can fol­low to as­sist them in mak­ing the de­ci­sion a slightly eas­ier one.

“The ini­tial step is for the home­owner to de­ter­mine the value of their prop­erty, along with the es­ti­mated cost of the re­quired ren­o­va­tion project,” says Goslett. “It is im­por­tant that the home­owner fac­tors in all costs in­volved in the project, such as the ma­te­ri­als and the labour costs of the con­trac­tor. Home­own­ers will need to bear in mind that where projects af­fect the struc­ture of the home they will be re­quired to get a build­ing in­spec­tor to sign off on the plans be­fore ground is bro­ken.”

He notes that as a gen­eral rule it is ad­vis­able to add an ad­di­tional 10% to the ren­o­va­tion costs to cover any un­ex­pected is­sues that may oc­cur dur­ing the project’s con­struc­tion. Once a ball­park fig­ure has been determined, the home­owner will be able to com­pare the cost of the ren­o­va­tion ver­sus prop­er­ties they would be able to pur­chase by adding that amount to their ex­ist­ing bond amount. Depend­ing on how long the home­owner has lived in their cur­rent prop­erty, the mar­ket and the home’s ap­pre­ci­a­tion over time, they may have also built up eq­uity that could be used to­wards the pur­chase of a larger prop­erty.

“Depend­ing on the home­owner’s bud­get and re­quire­ments, it may be pos­si­ble for a home­owner to find a prop­erty that meets their needs and some added ex­tras such as an ad­di­tional room, a dou­ble garage or prox­im­ity to good schools. Of course, there is the al­ter­na­tive that they don’t find any­thing within their price range, which points to the fact that it would be more fea­si­ble to un­der­take the ren­o­va­tion project. One way or the other, com­par­ing ap­ples with ap­ples will help make the home­owner’s de­ci­sion eas­ier,” he says.

Ac­cord­ing to Goslett, a ma­jor con­cern when de­cid­ing to ren­o­vate a prop­erty is the risk of over cap­i­tal­is­ing. If the home of­fers more, but has be­come over­priced for the area in which it is sit­u­ated, it may be very dif­fi­cult to sell the prop­erty at a later stage. “It is vi­tal to find out the av­er­age prop­erty price in the neigh­bour­hood be­fore ren­o­vat­ing or adding to the home. If the ren­o­va­tion costs ex­ceed the av­er­age house price, it may be quite a few years be­fore the home­owner would be able to sell their prop­erty and re­coup the money spent of the project. “That said, the de­ci­sion to ren­o­vate or change a home is not al­ways to in­crease the home’s value or for the pur­poses of re­sale. Very of­ten the ren­o­va­tion is to im­prove the living con­di­tions or life­style of the cur­rent home­own­ers — emo­tion is of­ten a driv­ing fac­tor in the de­ci­sion, not cost,” says Goslett. He notes that many home­own­ers would rather stay in the area for rea­sons that go be­yond ap­pre­ci­a­tion value, and as a re­sult, choose to ren­o­vate. “There are sev­eral rea­sons that peo­ple choose to stay in a cer­tain area, such as the fact that they grew up there and it holds sen­ti­men­tal value, it’s close to where they work or their chil­dren are set­tled and happy in the lo­cal school. “Many home­own­ers also en­joy the cre­ative free­dom and con­trol that they have over a ren­o­va­tion project, such as choos­ing the ma­te­ri­als or fix­tures used,” he says. “While living through a ren­o­va­tion can be stress­ful and of­ten dis­rup­tive to ev­ery­day life, mov­ing to a com­pletely new home is not with­out its own set of chal­lenges and costs.” Goslett says there are pros and cons to both op­tions, how­ever, each pro­vides the home­owner with the op­por­tu­nity to move one step closer to own­ing their ideal prop­erty. –– Prop­erty24

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