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Saturday, May 15, 2010

Wise home improvements

RENOVATING your home is often an aesthetic choice, but if done right, it can enhance both the abode's rental worth as well as its resale value.

Whether it's something minor (such as changing the faucet on your kitchen sink) or a major reconstruction (like adding a new floor to your home), some renovations will help recoup your returns near instantly, while others might be nothing more than an investment disaster.

Know what you want

Before getting started, it's important to decide whether the house you intend to renovate is for keeps.

“If you don't intend to sell or rent, than you're limited only by your imagination,” says KL Interior Design executive designer Robert Lee. “For the investor who's looking to rent or re-sell some day, he should realise that some renovations, though appealing to him, may end up making the house less marketable to a potential buyer or tenant,” he says.

Lee recalls a client many years ago who insisted on having nearly everything in one of the rooms in pink. “It was for his daughter. He wanted pink drapes, a pink carpet, wall, door, everything. Many years later, his daughter moved out of the home and they were looking to rent out the room but had problems finding a tenant.”

Making upgrades or changes to your home can be a costly affair. According to Lee, renovations can cost more and take longer to complete than initially envisaged.

“A lot of people that decide to renovate their home are often taken aback by how much it actually costs. When this happens, they go for relatively unknown contractors who, though cost less, tend to cut corners and give you a cheaper but less durable product,” he says.

Lee recalls a neighbour who wanted to install a new kitchen cabinet and sink but was “not willing to pay beyond a certain amount.”

“She paid RM1,500 but after only three years, the sink was shaking in its place, water was seeping into the cabinet and the wood started rotting. She ended up paying RM3,000 for a new cabinet, which, after five years, is still going strong.

“It's better to fork out a little more for something that lasts a long time. My neighbour could have just paid RM3,000 initially for a good job but because she was thrifty, she ended up paying RM4,500.”

Lee says people who want to renovate their home but are worried about the costs should do thorough research and find the best price.

Home improvements do not have to be expensive to look good and marketable. Home-Deco Art Sdn Bhd director Rachel Tam says the key to efficient spending is to spend wisely.

“The kitchen paint might be peeling but that doesn't mean you have to spend RM20,000 just to make it look good. All it may need is a fresh coat of paint and perhaps some of the appliances may need renewing,” she says.

Tam says that those looking to sell their homes should “know their limits” when it comes to making renovations.

“If you're living in a mid-to-high-end neighbourhood and plan to sell your home, it's best to limit renovations to a certain level,” she says.

“It's pointless to spend RM500,000 on renovations when the market rate for the average home within the area is just RM250,000. You're not going to make your money back when you sell.”

Lee gives an example of a client who installed a swimming pool in the yard of his home, which was located in a mid-income neighbourhood. “This guy was living in a corner single-storey terrace house. With the added space he had, he had a pool built. But when he wanted to sell the house, he had difficulties because nobody wanted to pay more for something which would require added maintenance,” he says.

For those looking to rent, knowing the type of tenant you are targeting is important too. Some tenants are only willing to pay so much.

Says Lee: “If you're living near a college or university and are targeting students as tenants, don't expect them to pay for the high-horsepower air-conditioning you installed in the room you are letting. This might be more appropriate if you are renting out to someone who's working.”

Renovations that pay

Freelance real-estate agent cum property investor Kamarul Ariff reckons that renovations made to the kitchen and bathroom are great ways to enhance the resale value of a property.

“Nowadays, people are finding more ways to beautify their kitchens and bathrooms. It's also what a lot of people look at first before buying a home.”

Ariff says renovation works can range from upgrading appliances, changing the flooring or a total make-over.

“Compared to renovating the living area or a master bedroom, the kitchen or bathroom is generally smaller and tend to cost lesser - making it easier and faster to recoup your cost,” he says.

He also says building a new room or an extension, though costly, can provide good, long-term returns. “It costs a lot but then you'll be able to rent it out. You'll be recover your money in no time,” he says.

By The Star

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