Don’t neglect maintenance of appreciating assets

Originally Posted in The Village News.

When times are tough and the economy is pinching the consumer from all sides, we often have to balance the budget to attend to priorities like home maintenance and the servicing of vehicles and operating equipment. Yet, how strange is it that so often we throw money at depreciating assets and ignore the ones that over time will give us growth way beyond that of a savings or investment account.

We happily (or not) respond to our vehicle’s need for regular servicing and maintenance and as much of a “grudge buy” as it is, we do it. Yet we leave our homes, particular second or holiday homes, to fall into a state of disrepair to such an extent that when one is forced to do something about it, the costs seem so exorbitant that we resist, complain (even if it is just to ourselves) and find reasons to do nothing.

The reality of the property market is that the better the state of your home, the better the investment growth and selling price when you put it on the market. If you are a long-term investor, then you know that over time your property value will grow incrementally. Maintaining it on a regular basis will keep it high in the value stakes.

The better maintained the property has been over the years, the less of an expense it will be to prepare the property when the time comes to sell. Living at the coast presents its own challenges when it comes to choosing materials to use for external applications, all of which come with a lifetime maintenance cost. It becomes a fight between what’s aesthetically pleasing and what’s practical and low maintenance. One’s personal taste will more often than not win over practicality and become the tick in the box for lots of maintenance in the years ahead.

The ideal scenario is to have a home-maintenance plan that addresses maintenance issues as they arise. You won’t hesitate to take your vehicle in for a service when it is due, so why not apply the same mind-set to what is likely to be one of your biggest lifetime investments. That way you spread the overall cost over a longer period of time, rather than having to take a big hit with one massive maintenance project that will no doubt leave you seething at the unexpected hole left in your wallet.

We often forget that depreciating assets, as much as they are needed, are just that and when quantifying the potential return from appreciating assets, it should be a no-brainer as to where we should be planning our spend. The challenge of having to do last-minute fixes inevitably means not having enough time to get comparative quotations from a selection of service providers and thereby making the mistake of selecting the wrong one, often based purely on price.

The Afrikaans adage “goedkoop is duurkoop” (loosely translated to “paying cheap prices will prove the be more expensive in the long run”) is indeed 100% accurate. More often than not, a cheap repair results in an even more expensive re-work, which negates the value of the “cheap” repair from the outset and can more than double the cost of having done it right the first time. Crisis management may solve a short-term problem but could very well result in excessive costs when the problem recurs.

In the same way as we plan maintenance on depreciating assets, so we should ensure that we do the same with those assets that will give as a real return on the related investment.