How to increase the value of your property

Abiodun Doherty (abiodundoherty@yahoo.com) 4 Comments

Abiodun Doherty
| credits: File

A wise man once defined discovery as “seeing what everyone else is seeing but thinking what no one else is thinking”. When it comes to value creation, you need to think differently. In real Estate we speak of value creation in the sense of increasing the amount of cash flow generated by your property or significantly increasing the real or perceived value of your property. Almost any property can be increased in value and almost any one with the courage to think and act differently can do this.

There are basically two types of property appreciation: natural and artificial. Natural appreciation is the amount your property is worth when the market goes up or down without any direct action of a property owner. This is the logic behind valuation reports done by Estate Surveyors and valuers. They aim to determine the market or present value of the property in focus. Artificial appreciation or forced appreciation is adding value using some of the methods we shall be discussing in this write up.

One of the easiest ways to increase the value of your property is to ensure that you have perfected the title to the property. To perfect the title means to ensure that it is properly registered with the government and all necessary documents such as approved building plans, are in place – in your name or the name of your company or organisation. A property whose document is perfected will have a Registered Conveyance, Certificate of Occupancy or Governor’s Consent. It is a fact that in valuing a property, the difference in value between properly registered properties and those that are not sometimes runs into millions. Should you choose to sell a property, the type of title that you have could affect how fast you will be able to sell and how much the buyer would be willing to pay – significantly.

In other to increase your property value, you need to critically examine the property for how you can put it to higher and better use. For instance, look at the unused space in and around the building and examine their potential as a revenue source. You could change an old warehouse into an office building, a house into an apartment, a warehouse into a residential apartment, or an abandoned property into retail shops. You often see a few people taking advantages like these and converting a low income producing property into a high income producing property.

Pay attention to neighbourhood trends and be very creative. There are certain residential areas that are fast turning into commercial areas. This trend increases the noise level in the area and reduces human traffic in such areas at night. More often than not, this increases the level of insecurity in such areas for the few property owners who are still living in their property. Such a property owner could apply for the necessary government approval, convert their property to a commercial one and earn more in the process. The increased fund could be used to buy or rent a property in a residential area.

Consider multiple uses for your property. Few years back, the owner of a chain of gas stations (filing stations) in Nigeria innovatively increased the value of his properties and made millions in the process. Whenever he was developing a gas station he would partner with a particular bank and build a banking hall within the complex. More recently, there is also an increasing trend of partnering with fast food companies to establish branches in gas stations. These astute investors are maximizing returns on their properties compared to others who are engaged in similar businesses but who fail to see the opportunities.

In the heyday of banking expansion boom in Nigeria, a new generation bank seeking to have a footprint in an area of Lagos approached a woman who had a well located property suitable for their purposes, to sell it to them. The bank was willing to pay N20m above the actual value of properties in that area. The woman could comfortably sell, buy a similar property in quieter neighbourhoods in the same area and still have additional money to invest.

Another way of increasing the value of your property is by renovation and rent increase. Owners of properties often fail to have the appropriate rents for their properties due to the existence of old tenants who have not been migrated to the prevailing rent in the area. Although arbitrary rent increase is wrong, owners of properties should not be berated for seeking better rents from their properties.

Whatever kind of property you own, analyse it and maximise its value.