Adding Value to your Investments

Adding Value to your Investments.

Television programmes and Sunday Newspaper supplements would have you believe that adding value to property can be as simple as freshening up paintwork or updating your Kitchen units and to a degree this can be true.

A seasoned property investor however will take a more holistic view about how they can add value to a property and this month we look at some of the things you may wish to consider:

Planning:

The most significant value-add can be by what is known as planning gain, whereby the securing of a planning consent, without necessarily undertaking the development works, can yield a tidy profit.  I therefore urge you to have a look at your existing portfolio as well as those new properties you may be interested in and see if there is a planning angle. This may be by gaining consent for an additional unit in the grounds or adding another storey to the existing building. It may even be by way of a change of use, for example from commercial use to residential or from residential to use as an HMO.  If you are unsure of the available permitted development rights that may exist then talk to a local architect or planning consultant. It may be that you are sitting on an asset where greater value could be unlocked than could be achieved by buying another property so be sure to assess your options.

Market Knowledge

Another method of adding value is to provide your local market with exactly what is currently in demand. A typical example nowadays, with the propensity for people to be working remotely, is to provide a designated home office space. Those of you with large one bedroom flats may wish to look at subdivision of space to create a study area to cater for those who have to do their work at least partly from home. In some areas the creation of off road parking will provide a superb return on the costs involved. The key is therefore to understand what is in demand from Buyers and renters and seek to provide it. 

Maximise space.

It is generally true that more space means more money and therefore you should perhaps consider adding a loft conversion, garage conversion, or rear extension to your property ahead of its sale or letting. Consider the cost of an extension against the increase in rent or sale price and calculate the yield that the extension alone will provide. You may find it is greater than the yield for the unextended house even allowing for the costs involved.

Green Credentials:

This is becoming ever more popular and given the ongoing increases in utility costs, those properties which can generate energy either free of charge or at low cost are likely to have a greater value. It is also becoming the case that mortgage rates are cheaper for more energy efficient homes and so you could unlock some additional rental value by going green. Solar panel systems are much cheaper than they were historically and are popular with Buyers and renters alike. Efficient heating systems such as heat pumps are also likely to prove popular. Electric car charging points on drives are now mandatory for new builds and in my opinion should be included in every refurbishment that you undertake. Grants are still available for some energy measures and so you should investigate what is available in your area.

Service Offering:

Another thought in terms of adding value relates to the service that you provide to your tenants. It may be that by consistently offering an exceptional service either by way of promptness of repairs, or quality of accommodation or on additional services provided, that you are able to extract more value by being able to charge more. Create a brand loyalty and following and you should be able to extract greater value. I have seen this successfully achieved in the Serviced Accommodation sector with people offering enhanced booking facilities, discounts at local restaurants etc and an almost concierge service for guests. Unsurprisingly Guests are willing to pay more.

Presentation:

And finally, the fresh paintwork and updated Kitchen units can allow for a better price to be achieved. Employ the professionals if you are not adept at such work as little will flatten pricing more than shoddy or unfinished work!

In all aspects of property, increasing value is really about being able to give people exactly what they want. Not only will they pay more, but they are likely to stay loyal to you allowing you to extract value on an ongoing basis.

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