You might be thinking about buying a property to renovate and sell on, this article will guide you through what to do to ensure that you turn a profit.
Invest in the worst house in a sought-after area.
The aim here is to achieve the maximum potential of value. So, if you buy the worst house on the best street then there is potential for the house’s value to increase. Of course, in its current state the house is likely to put potential buys off, and so the price will reflect that. As an individual you can’t change an entire street or area, but you do have the ability to change a single house, or even completely rebuild it if you want.
The vast majority of the profit will be made in the purchase rather than what you end up doing to the property. So, it’s crucial that you pay close attention to the property’s initial price. The idea is to avoid paying a premium on the house, which is why it’s important to find a property that you feel has potential that hasn’t yet been noticed by other prospective buyers. Realistically speaking, unless you’re thinking of buying a big property, the potential profit margin is fairly narrow. So, this is an investment of time and money that needs to be carefully considered.
Get the Essentials First.
You might think that spending money on the kitchen, bathroom and other cosmetic finishes is a priority in getting your property to look the part, but the truth is that as soon as a valuer comes to the property they won’t really be looking at those things, their main focus will be the property itself.
The most essential things to spend your limited budget on are the things that keep the property’s value up. Before even considering adding a new kitchen, make sure that the building is warm, dry, damp free and secure. Before any cosmetic work, make sure that you’ve worked on securing the roof, any necessary underpinning or stabalisation and if the property needs rewiring that should also take priority, because there’s nothing worst than finding out your property needs rewiring, after you’ve redecorated it!
Remember why you’re renovating.
If this is your first project, one of the biggest risks to your investment is that you get carried away. It’s always a bonus if you’re enjoying the renovation but remember, it’s not an interior design competition. Remember that your personal requirements aren’t necessarily selling points for prospective buyers.
This whole project will come down to discipline. You need to think about who is going to be buying this house, and what they’re going to look for in a property. Do your research on your target audience, look at what other developers are doing in your area, and be sure that when you’re working on your property you’re adding elements that are going to be selling points.
It’s always worth considering that adding or updating the central heating system in your property will add more value to the building than it costs. It’s an essential element most buyers and valuers look for when looking at the property. Getting a plumber to add central heating to the average three bedroom house will typically cost £3,000 to £4,000. But do remember that if you are planning on updating the heating system then that will need to be done alongside improving the general energy efficient of the building.
A wise and simple investment in your property can be achieved by simply sealing draughts around windows and doors (but not airbricks), replacing windows that are too damaged for repair with double glazing and adding insulation, especially in the loft space.
Obviously, you don’t want to be spending any more money than you have to, so if the existing boiler is in good working order and provides adequate heat for the requirement of the building, then by all means use it. If you’re lucky and this existing boiler has the capacity, then you could even add new radiators, maybe a heated towel rail and underfloor heating to the already existing system. However, this wouldn’t be an option for boilers that draw their air intake from inside the house, and you might have to consider a replacement.
Save yourself the hassle: Remodel whilst you Renovate.
Once you’ve covered the essentials mentioned above, then your next step is to focus on the aesthetics; your first focus should be on making the best use of the space available. For cost effectiveness it might be worth considering adding space, like an extension.
- Weigh up your options. Can you achieve the results you’re after by just making better use of the space?
- A good piece of advice is to convert space that hasn’t been converted yet, for example: the loft or the garage – if it’s attached to the property, even a cellar has the potential to be turned into a living space.
- Also consider building upwards, because it’s often cheaper to build up than it is to extend out, and that way you won’t be losing out on garden or driveway space. It’s very rare that properties are extended from the front, typically the best options are to extend sideways or backwards.
Finally, that leaves you with two options, if you feel that the ones above aren’t for you:
- Build down. Creating a basement can be very expensive however, and would only really be recommended in a high value property, in locations like London or the Home Counties.
- If none of these are options for you, you do always have the option of an annex. This will create extra space at the bottom of the garden and could potentially be turned into its own living quarters.
Fixing the Defects.
Small defects in a property aren’t going to massively affect the value. But, when looked at together they could be the thing that prevents you from selling your property at the asking price. Here is a list of easy to fix defects that potential buyers and valuers will notice.
” Sticking doors and window
” Ungreased, squeaky door hinges
” Mouldy sealants in toilets, bathrooms and kitchens
” Faulty door latches
” Dripping taps
” Loose tiles
” Sewer odours coming from the drains
” Cracked, chipped or broken windows
” Loose floor boards, this includes squeaky stairs
” Cracks in plasterwork
” Peeling or chipped paintwork
Don’t forget the Ceiling Value.
Before even spending a penny on your renovations, bear in mind that there is a maximum value that any property can achieve, this is called the ceiling value. This means that if you keep adding to your renovations you will reach a point when you’re spending money that you will never get back.
The best way to find the ceiling value of your property is by doing your research. Find out how much the properties in your area are selling for. Visit websites like Zoopla and Rightmove for a better idea. You may be lucky and break the last highest price in your area, but it’s unlikely that you’ll get much more.