Ensuring you don't overcapitalise
Category News
One of the biggest fears for new property investors is Overcapitalising. What does it mean to over capitalise on an investment property? When buying a property as an income earner, buyers often are stuck between not doing any improvements for fear their tenants might do costly damages, and the other scenario is spending too much on upgrades in an area where a higher rental would not be achievable. Both scenarios are valid concerns and below are a few things to keep in mind to assist in making an educated decision when considering buying an investment property.
When upgrading, consider spending on only those conveniences that are easy to maintain and will increase your earning potential. Examples of these would be to upgrade a bathroom to include a bath and shower, units with full bathrooms can cater for singles or families. Always consider a durable tile preferably South African made that can be found again at a later stage, such examples would be the standard white Jonson tile available at most retailers. This bathroom tile is durable, easily replaced and who doesn’t like a white bathroom? If you are considering painting the walls in the bathrooms, always ask for something that is durable and can protect against mould and mildew. Use neutral paint colours on the bedroom and living rooms walls that are washable- keeping in mind that tenants will almost always want to paint kids rooms or feature walls, and by using a neutral colour, you can minimise costs when repainting.
Stay away from carpets altogether, they are costly to install, keep clean and are difficult to replace in small areas. When buying a property for the sole purpose of letting it – always consider the most durable flooring, tiles (the plainer the better). Wooden floors ad allot of charm but run the risk of borer and white ant damage, and laminate flooring is difficult to maintain and not water resistant on most of the affordable brands. Tenants also will need to be educated on how to care for and maintain these floors, so tiling is always the sure safe way.
he places where you do want to spend a bit is the kitchen, put solid counters and decent cupboards as they will endure allot of wear and tear, and keep in mind that the kitchen and bathroom are the 2 most used spaces in a property so are also the biggest selling points when placing tenants.
Happy house hunting folks!
Author: Stefanie Keplinger-Esterhuizen