Thinking about renovating a house?
The rise in television shows like Homes Under The Hammer, Sarah Beeny’s Property Ladder and How to be a Property Developer is largely due to the rise in the number of amateurs looking to make money by buying and selling properties. And you might be one of the growing number of investors who are looking to do the same.
Fraught with potential pitfalls to part the unprepared with their hard-earned cash, property development can offer big returns on your capital but can also leave you out of pocket. In this guide, we take a look at the best way to renovating a house to maximise your profit.
Do Your Homework Before Renovating a House
It goes without saying that buying the right property at the right price is the first thing you need to consider. There is no point buying a house at the current market value if it needs £20k spending on it. You need to ensure that the price you pay for a property reflects the investment you will need to commit to bring it up to market value including all of your expenses. This should include both the cost of renovating a house as well as the fees and tax associated with buying it and then selling it. If the price you pay including your costs exceeds the maximum potential market value then there is no point in investing.
Properties come to market all the time that reflect the improvement required and give opportunities for the right investors to make a profit. However, the demand is often higher than the supply and can lead to stiff competition at auction or when making an offer. The trick is to know (and be able to stick to) your maximum budget.
On this note, you should also be asking agents about the demographics of the local area. Find out who is buying properties like the one you are considering and what their requirements are. Renovating an apartment for single professionals will require a very different approach to remodelling a semi for a young family.
Get the Professionals In
Whilst there are some property developers that do a lot of the renovation work themselves, the fact is that some jobs should only be undertaken by skilled tradesmen; plumbing, electrical and roofing jobs for example. The other thing to consider is that by hiring professional help, you will reduce the amount of time that your renovation takes you, allowing you to realise its profit sooner. You can read our guide on how to choose a builder here.
It’s preferable to bring along a general builder (someone you intend working, or have worked, with) to a viewing before you make an offer on a property. They can help inform you of the works needed and a rough idea of the costs involved.
Make a Plan
As well as a fully costed budget, it’s advised that you make a plan for the works that are needed so that you can ensure that materials are on site when you need them and that the relevant trades can be booked in when they are required. A swift renovation project relies on good management and saving money by keeping all of the trades on schedule. Arranging for the kitchen fitter to come before the walls have been plastered could cost you time and money. If this is your first project then take the time to understand the process and amount of time that each element of the renovation will take.
Focus Your Attention
When you are renovating a house that you are trying to resell then you will want to focus on the key areas that affect a sale such as building repairs, the kitchen and bathroom. These are the high-cost items that will influence a potential buyer far more than your choice of floor covering or the colour on the walls. Though, staging and presentation are important, they are of little relevance if you have ignored an avocado bathroom suite, ill-equipped kitchen and holes in the roof.
Focus on the superficial defects as well as the big things but don’t get carried away with your choice of walnut flooring.
Aim to Improve
The key to maximising your renovation project is to add value and you should be looking to do this with everything you undertake in the property. Adding central heating, creating off-road parking or converting space for a new bedroom will all increase your chances of making money.
Be creative with how you look at a property and try to identify the opportunities for remodelling. Knocking through an existing wall (not a load bearing one!) could create a more appealing flow and create an open plan kitchen/diner.
Even adding space in the garden with a quality outbuilding or a conservatory could all help boost profits.
When it comes to reselling a property, simplicity is the key and though you might prefer bold and colourful wallpaper, many people would prefer a blank canvas. To this end, decoration should be plain but well done and kept as bright as possible to make a property appear lighter and larger.
Don’t Thrown the Baby Out with the Bath Water
By this, we mean that there is often no need to go to additional expense by ripping out existing fittings. Many new property developers make the mistake of ripping out an old kitchen and replacing it with a brand new one. Whilst this may seem like an effective way to increase the value of a home, it can be done less expensively. As long as the design layout is good and the shell of the units is sound then you can inject a new lease of life with new worktops, tiles and cupboard doors. Some units may even benefit for a simple replacement of handles and a freshen up. Consider what you are removing and decide whether it can be re-used before throwing it in the skip.
Remember Whose Home It Is
Whilst you may own the deeds of the property, it really won’t be you who is going to be living there. Remember this when you are ordering a new bathroom and stick to your budget. Tempting though it is to stamp your personality on your designs, be disciplined and stick to the plan. Renovating a house for profit is different to renovating your own home.
Make the Right First Impression
First impressions are important and ensuring that your renovation property has good curb appeal is a must. Tidy and neat front lawns or driveways can help to create a positive footing for any viewings.
A smart front door is also an attractive way of boosting that initial vibe for buyers and you can give wooden doors a new lease of life with a fresh paint job.
Some developers like to use simple furniture to help stage a property they are selling and can help give an impression of a lifestyle to potential buyers rather than asking too much of their imagination. However, adding furniture to your budget isn’t necessary nor is it recommended that you simply use old bits of furniture that you have around your own home. Developers who turn round homes on a regular basis sometimes use a stock of simple but smart furnishings that they simply store in between projects with which to dress their homes for sale. Our advice here is not to get carried away with the staging but let the quality of the work you have done on your refurbishment speak for itself.
Stick to the Budget
When renovating a house you should always remember to keep an eye on the finances and do this regularly. There is a ceiling price to any property and over-development is a common mistake for new property developers.
If you would like some more advice on how to renovate a house for the maximum profit or are looking for a project of your own then contact Property Assistant today on 0118 912 2370 to discuss how we can help.
Featured image via Pixabay.