If you’re property wise, you’ll be looking to make more “profit” when you buy a home than when you sell it in future.

And, says Berry Everitt, CEO of the Chas Everitt International property group, the way to do this is develop an eye for homes in good areas that may not look so great at the time of purchase but have good profit potential – in other words, homes that have the “right” things wrong with them.

Writing in the Property Signposts newsletter, he says these items include the following:

* A bad paint job. You should actually consider it a plus if you find a good property that really needs painting. You can discount your offer to compensate for the painting expense and inconvenience, and, immediately the paint is dry, look forward to an increase in home value equal to three to five times the cost of the paint.

* Old or uninspiring light fixtures. Among the least expensive and most profitable home improvements are new light fixtures – and skylights to open up dark hallways, bathrooms or kitchens.

* Ratty old carpets (provided the flooring beneath is sound). Another extremely profitable home improvement you can make is to install fresh new floor coverings. Sanding and varnishing existing wooden floors is also a good option, especially if they are in keeping with the age and character of the home.

* A neglected garden. Spending even a few hundred rand on plants, lawn, and a garden clean-up often adds two to three times that expense to the market value of the home.

* One bathroom. Buying a one-bathroom home can be very profitable if a second bathroom can be added within the existing floorspace. A second bathroom usually adds at least twice its cost to the home’s value – and it makes the home more marketable.

“On the other hand, though, you should absolutely avoid buying a home that needs a new roof, a foundation repair, a major electrical or plumbing upgrade, or repairs to water or termite damage.

“And, unless you are planning to live in the home for a long time, avoid buying one that will require additions such as a family room or another bedroom to make right for you. Such upgrades rarely add as much market value as they cost, and you are better off buying a home that already has all the rooms you need, even if it is somewhat more expensive.”

*Berry Everitt is the CEO of the Chas Everitt International property group.

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Economic growth is picking up, interest rates are low and home prices are still reasonable, so many people have decided this is the best time for them to get into the property market by buying their first home.

However, says Berry Everitt, CEO of the Chas Everitt International property group, after they select an area they would like to live in and start looking at individual properties, first-time buyers often find themselves “freezing up” at the prospect of the huge commitment they are about to make.

What if they pick a property that turns out to need expensive repairs? What if the new neighbours turn out to be ghastly? What if something better comes up just after they’ve signed a sale agreement?

“Well, the first thing they need to remember is that there is no such thing as a ‘perfect’ property – for one thing, almost everyone’s home is something of a compromise between what they dream of and what they can afford.

“But having said that, every buyer also has certain non-negotiables – needs, rather than wants – and you should take the time to think about these and make a written checklist so that you can easily establish which of the homes you view has the most boxes ticked for the best price.”

Everitt says this strategy will prevent buyers from becoming distracted by nice-to-have but unnecessary features, or from being unduly influenced by “bargain” pricing, and will help them to resist any high-pressure selling of unsuitable properties.

“And most importantly, it will give you peace of mind, knowing that you have picked a home that is right for you and is thus your plum property, whatever else may come on to the market later.”

“Owning a home is like any other major commitment – you need to be mentally and financially ready for it,” says Adrian Goslett, CEO of RE/MAX Southern Africa.

Goslett explains that the high costs involved in buying your own home mean that you will need to be prepared to stay put for around three to five years.

“Except in a roaring real estate market, it usually doesn’t make sense to buy a home you will own for less than three to five years. The high transaction costs involved in buying and selling property means that you could end up losing money on the deal if you sell before your property has had time to rise in value and you have had time to pay off a bit of the loan and absorb some of the transaction costs.”

Of course, a key consideration that needs to be carefully evaluated before buying a home is whether you can afford to make the necessary financial commitment. “To make an accurate assessment, it is highly advisable to visit or call one of the many bond originators like Mortgage Plus or banks. They will help you assess whether you can afford to buy a home or not. It is critical that you be completely transparent about your monthly expenses, so that they can assist you in making a truly informed decision.

“Once your mortgage originator or bank has assessed your financial position, they will be able to tell you what you need to earn to qualify for the bond amount you require, or they will let you know how much you qualify for based on your income and expenses.”

Goslett notes that first-time buyers must keep in mind that in the majority of cases, they will also need to save a deposit of up to 20% of the purchase price of the house, plus enough money to cover the transfer and electricity connection costs as banks seldom, if ever, approve 100% home loans these days. In addition, Goslett advises that homeowners should ensure that should the interest rate increase, as is predicted for early in 2011, they are still able to afford the increased monthly bond repayments.

He explains that your credit rating is an essential component for bond approvals. “Many young people don’t realise the importance of keeping your financial records and credit ratings in order. If you have lots of late payments, have declared bankruptcy or left old debts unpaid, it will be much harder for you to be approved for a home loan. And even if you do get a home loan, your bad credit rating will mean you will more than likely have to pay a much higher interest rate.” – Eugene Brink

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