With buy-to-let investors moving back into residential property in a big way, there is a growing tendency to purchase homes, especially sectional title units, which can be upgraded, for relatively low sums - thereby putting the owners in a position to charge a higher rental.
Upgrading can be a great way to increase rental earnings or your home's value but beware of less reputable and unreliable contractors.
Commenting on this trend, Bill Rawson, Chairman of the Rawson Property Group, says those going this route have to be aware that there can be serious dangers in employing contractors from the informal sector, who often come in with seductively low quotes.
“No one denies that South Africa’s ‘bakkie builders’ have played a useful role in home renovations. However, it has to be acknowledged, as Jason Lee has explained at length in his book Making Money Out of Property in South Africa, that some of these informal contractors have time-and-again let down their clients in a very big way – and cost them a lot of money.”
Lee, says Rawson, has listed the more common failings and annoying practices of such builders:
To present the client with a very vague, ill-defined quote and then to claim all along the line for ‘extras’ not covered by this.
To leave the completion dates unspecified or if these are stated to ignore them.
To demand a large upfront deposit to purchase materials, the reason for this being given that, as small operators, they have no cash flow to cover such payments.
To use cheaper materials than those specified and even on some occasions to leave out specified materials.
To employ unskilled, untrained ‘artisans’ who are incapable of neat work.
To arrive late on site and/or to leave early and on occasions not to pitch up at all.
To demand a final payment – not specified in the quote – to get the job completed on the grounds that the original quote was inadequate.
To ‘disappear’ when this extra sum is paid or on completion of the job, after which they are not contactable at any of the addresses given by them and not available for the all-important snag and rectification tasks, for which a good builder would be on hand for at least two to three months.
To damage the owner’s property and materials, often when these are not even in the area in which they are working.
Many upgraders, says Rawson, like to use a qualified architect to design and supervise their work, but on a small job this is often not financially viable because professional fees tend to be high. Furthermore, he says some architects are not good project managers and are simply not capable of handling a difficult contractor. They also have a tendency to want to bring in other professionals, such as structural engineers, landscape architects and quantity surveyors, when these may not be necessary on a small job.
In the long run, says Rawson, it may well pay to employ a more expensive but reputable contractor, especially one who can produce good references and testimonials from previous clients. It also helps, he says, if such contractors are members of the Master Builders’ Association to whom the client can report to in the event of bad performance by the builder.
“Whatever route you decide to go, it is important to avoid paying upfront deposits and to ensure that every item in the job to be done, even in the smallest repair and rectification tasks, is listed so that ‘extras’ are kept to a minimum. On a well-managed contract these should only be needed for those occasions when the client decides to change the design at a later stage.”
The contract document, adds Rawson, should be signed and witnessed and a reputable person appointed to check all work done and sign off the amounts charged for it. Only in this way will the eventual cost of the project be kept to the originally quoted sum.