With the increase in television shows like The Block and Renovation Rescue, one could believe that renovating for profit can be done quickly and easily on just about any property, anywhere for maximum profit. WRONG! Renovating for profit takes a great deal more research and careful planing than that. So what do you need to consider before you buy that property? Let’s take a look.
Renovating for Profit – Words of Caution
Research, Research, RESEARCH!
Before running head first into buying a property to renovate, have you considered who your potential buyer will be? Have you thought about what their requirements will be? There is little point purchasing a 2 bedroom cottage, that will involve a major structural renovation to turn it into the 4 bedroom family home your buyer will be in the market for. Alternatively, if your target market is first home buyers or empty nesters, less bedrooms will work just fine. Take some time to build a profile of your ideal purchaser, think about the area you are renovating in, think about the size of the property, and the length of time and budget involved in flipping this renovation for the best profit possible.
Know What You Are Buying
Have you considered what kind of renovation you would like to do? Are you in the market for a full structural renovation, or would you prefer a quick flip with just some cosmetic changes? Structural renovation can increase the profit, but of course you will increase your expenditure and your time frame considerably. Cosmetic renovations, may include new kitchens or bathrooms, a new coat of paint, and a general jazz up of the home, which can be completed quickly and economically, however are unlikely to net you the profit from a well thought out structural reno. Be sure to invest in a good pre-purchase pest and house inspection, to fully understand what is involved in bringing your investment up to scratch. Enlist the services of a good builder to advise you PRIOR to spending your money on the property. Most builders will be happy to help, even if for a small fee.
Have A Contingency Budget
You’ve purchased your property, made plans for your renovation, right to the very tip of your budget, and that’s when the builder calls to let you know the plumber has found all the clay pipes have cracks in them and they need to be replaced. While a hypothetical situation, you would be surprised how often a contingency budget will need to be accessed. Pre-purchase inspections and builders advice, can only go so far, they cannot see through walls or under slabs to be sure what you are buying. A contingency budget will ensure you are prepared for any situation.
Enlist The Services Of A Builder You Trust
The property is now yours, it’s time to do the renovations, this is the time you really need a great relationship with your builder. A good builder will be able to advise you throughout the renovation at what really needs to be done, and what can simply do with small cosmetic changes to make the most out of your investment. Investment buyers are big business to builders, they often represent repeat business for a construction company, understand that this is your power and negotiate yourself the best deals possible. Find a builder who is happy to have you help out on the job. Some demolition can be done by even the freshest of novices, how about the painting and the landscaping? Much can be done by yourself to keep costs low, great builders will not only advise but encourage this.
Find A Great Sales Agent
The renovation is complete, now it’s time to mount the best campaign to ensure you reach the maximum potential. Stage your home, factor this cost into your renovation budget, the rewards will come in the form of a quicker sale for a higher price, as buying is an emotional decision. If you walk into a fully styled home, and can imagine yourself and your family living there, you will pay a little more for privileged of this becoming your home.
Reap The Rewards
With a whole lot of research and great advice, your renovation for profit can be just that. Be cautious with your money, invest wisely and avoid the profit draining away. It only takes a few bad decisions for your profit to be lost, but a few good ones can really bring the financial reward.
Have you renovated for profit? Would you consider painting a home yourself? What other jobs would you like to try?
Linking up with Essentially Jess for #IBOT