It’s understandable that once the excitement of owning an investment property has settled, some investors  get sick of making sacrifices to pay the extra mortgage and start to think there must be a better way to spend their money. After all, many things in life that are started with enthusiasm turn out to be a harder slog when the novelty wears off. But investors who get itchy feet and  decide to move on have lost the sense of deferred gratification that led them to invest in property in the first place. They want the instant gratification they think selling will deliver.

In fact, selling too soon often delivers the opposite of what investors are hoping for. Firstly, every real estate sale incurs costs which eat into the profits, so selling too soon often  reduces the overall financial gain, especially if they sell before they have held the property long enough to see the market deliver its cyclical capital appreciation.

The most effective way investors can enjoy their increasing wealth is to practise good old-fashioned patience. If they really want to make things happen, they are better off borrowing more money and buying a second property than selling the one they own (provided they bought sensibly in the first place of course!). Astute investors keep buying more properties as their borrowing power increases with the rise in equity that accrues with capital appreciation and rising rents.

Holding investment properties long-term means greater wealth when it is needed (usually on retirement when income from work ceases).

It is true that some short-term self-sacrifice is involved in this strategy. Investors buying their first property are usually stretching themselves just to get a foot on the investment ladder and there is little money left over for  luxuries. It is not until their portfolio grows in size that they will be less stretched and more able to increase their lifestyle spending without selling a property to do it.

The best strategy for most investors is to embark on a program of planned property investment at their earliest financial convenience – usually when the equity in their family home reaches a fairly high level and after consulting their accountant.

Then they simply keep adding to their portfolio until they increase their assets to the level that suits their aims and aspirations.

High and dry on a waterfront reserve in one of Nelson Bays premier streets this versatile property will be sadly missed by current owners, but unfortunatley must be sold. Looking down onto the pristine sands of Dutchies beach, and across the bay to Broughton Island, this is one of the best positions in the bay. Currently two self contained units, having been a popular holdiay destination with great income and many return clients, it also lends itself to conversation to one large home. If you want the best, this could be it.!

‘Silvana Court’ will be the ideal destination for your next family holiday or weekend away. Park the car and lock it away in the lock up garage and you will be able to stroll to both Shoal Bay Beach and Little Beach as well as the RSL Club and restaurants. Internally the apartment has had a face lift with a new kitchen to include a dishwasher and a modern bathroom. This is priced to suit families who are wanting a comfortable holiday without breaking the bank!

 There are several factors that contribute to a home’s appeal that aren’t always immediately quantifiable – orientation, design that maximises natural light, pleasing proportions and other factors that contribute to market appeal.

What if, for example, there are two identical homes, but the living area of one home faces north and the other south? Given that more buyers write ‘north-facing’ on their wish list, the north-facing property is surely more saleable (therefore worth more) than the south-facing one. All the same, the owners of the south-facing one probably think that their home has the same features and of course value as the one that buyers prefer.

The kind of appeal that makes buyers go ‘wow’ can also come simply from regular maintenance and attention to detail in the presentation of the property. A house that looks loved and cared for is shown to its best advantage, yet it may be identical in most other respects to a less popular property in the neighbourhood.

Elusive appeal is also likely to be a function of the original design concept of the house. After all, it is not uncommon for homeowners to “save” money at the planning stage of building or extensions. They achieve the measurable features they were after but not the elusive ‘wow’ factor. Good design, especially the skilful use of natural light, window placement and correct orientation on the land adds something you can recognise but can’t always define. Many people add on, or make minor changes as the need arises without taking a holistic view of their property. They think in terms of immediate solutions to particular problems (need large fourth bedroom with ensuite to become master bedroom) rather than conceptualising the impact of the house as a whole (small living area and kitchen means scale of property is out of balance).

Extending without reference to the scale of the home, for example, creates an floorplan that is not balanced and harmonious. Such a house is likely to lack the aesthetic pull of more cohesive designs even though the number of features looks the same when listed.

Home owners who want to sve money should be aware that skimping on planning and design could mean that the house never reaches it’s full potential in terms of re-sale value, no matter how impressive its many ‘features’.

In most areas there has been a rush on dwellings that fall into the first home buyer category now that governments are offering grants to help first home buyers get into the market. As a result, many investment property owners are thinking of putting their properties on the market for sale while the chances of a high price are looking good.

Is this the best way for them to go?

In fact, selling too soon often delivers the opposite of what investors are hoping for. Every real esate sale incurs costs which eat into the profits, so selling too soon often reduces the overall gain especially if they sell before they have held the property long enough to see serious capital appreciation.

It seems that investors who get itchy feet have lost the sense of deferred gratification that led them to invest in property in the first place. They are tired of making sacrifices to pay the extra mortgage and they expect too much too soon. Maybe they have forgotten that the most effective way to enjoy their increasing wealth is to let capital appreciation and rent increases do their job over time. Holding investment properties long-term means greater wealth when it is needed (usually on retirement when income from work ceases.)

Instead of selling, investors who really want to improve their long-term wealth would be better off increasing their loan and buying a second investment property (provided they bought sensibly in the first place of course!) Astute investors keep buying more properties as their borrowing power increases with the rise in equity that accrues with capital appreciation.

It is true that some short-term self-sacrifice is involved in this strategy. Investors buying their first property are usually stretching themselves just to get a foot on the investment ladder and there is little money left over for luxuries. It is not until their portfolio grows in size that they will be less stretched and more able to increase their lifestyle spending without selling a property to do it.

The best strategy for most investors is to embark on a program of planned property investment at their earliest financial convenience – usually when the equity in their family home reaches a fairly high level and after consulting their accountant.

Then they simply keep adding to their portfolio until they increase their assets to the level that suits their aims and aspirations.

Firstly, ask yourself whether improvements will make your house significantly better than the others in your street. The best-house-in-the-street phenomenon is often an unhappy one as the values of the other houses in the street affect the upgraded one – after all, this is not a street where purchasers will be looking to spend the higher prices the vendor is after. Those who renovate above and beyond the level of surrounding homes are less likely to get good capital appreciation when they sell.

Furthermore, do the changes you are making really improve the home? Many home owners simply increase the cost of their home without necessarily adding to its value, because some alterations don’t improve the standard of the property enough to compensate for their cost. Others leave a mishmash of disparate styles, or serve only to emphasise the datedness of the original house, or are too personal in their application to have wide appeal and so end up worth less than they cost.

It is not even uncommon for home owners to sacrifice one feature to gain another, thereby adding cost but not value. Frequently reported examples of this sort of expenditure include turning a bedroom into a dining room or a garage into a rumpus room.

Ideally, extensions should be seamlessly integrated with the original home. Many three-bedroom homes don’t “work” once a fourth bedroom and family room are added – the original rooms may be too small to balance the extensions. Furthermore, bad design resulting in poor natural light or an inconvenient floor plan will be reflected in the sale price of the property. Many of these problems could be avoided if architects were consulted before the work was undertaken. “Saving” on the cost of an architect is nearly always false economy.

Sometimes renovators over-capitalise by deviating from their budget during the course of their renovations. Many homes and locations don’t justify the top-of-the-range appliances and fittings some renovators choose. And if renovators run out of money before completing the work or have to skimp on the finishing touches, the overall effect can be disappointing and limit the ultimate selling price.

Home owners concerned about investment potential should also think twice before making changes for their own unique needs. Above all, major work should not be carried out if homeowners plan to sell in the near future. Sometimes a homeowner will ask a question such as: “I am planning to sell in a year but the house could do with a new bathroom. Should I undertake the work?” It could be argued that the home owner will get the benefit of using the new bathroom for the year until the property is sold, but unless they are in a location or marketplace or price range where the cost of the bathroom will be easily absorbed in the overall capital increase during the next year, it would be pointless to renovate the bathroom only to sell it. Prospective buyers may want an entirely different bathroom, or a bathroom that is very new might make the kitchen or other areas of the house look as if they need work.

The state of the market can also be an important factor in the overall cost-effectiveness of renovating a property. In a buyers’ market, such as we are currently experiencing in most parts of Australia and New Zealand, it often makes sense to take advantage of someone else’s hard work and expenditure rather than embark on costly and time-consuming renovations of your own, unless you are so attached to the property that you can’t bear to leave it, or unless you live in an area or type of home where there is always strong demand and low supply. Trading up in a buyers’ market should actually produce a financial advantage as you inevitably ‘save’ money when you purchase a more expensive house on a slow market. (For example, do your sums and work out why a 10% ‘loss’ on a $500,000 home that you are selling is less than a 10% gain you make on the $750,000 house you are buying which is also ‘losing’ its owner 10%). Trading up makes even more sense in areas where First Home Buyers’ Grants are raising the price of the kind of house you might be selling but not affecting the cost of the home you are planning to purchase.

At the same time, quality of life is also important and the good news is that if people stay in a property long term the cost of idiosyncratic changes will usually be absorbed in most locations experiencing growth. The question of whether they would have made more money by making different choices often simply doesn’t come up.

Homeowners wanting to maximise the investment potential of their homes should consider consulting an estate agent with whom they have a good relationship before making improvements. In many instances, agents aren’t called until the work is nearly completed and it’s too late to choose a different path. Builders can tell you what your renovations will cost but only an experienced, well-referenced estate agent can tell you whether the value is worth the cost sufficiently to justify the expenditure.