Renovator’s Delights

After having done all of the basic research and preparation, you’re ready to begin searching for the perfect place.

This is where it gets exciting. You must keep your wits about you, as choosing a property is critical.

When you take your researcher’s hat off and put your buyer’s hat on, what you want is renovation potential.

You have to assess each property not only on where it’s at right now, but what it can be once you’ve renovated it.

Your main consideration is the state of the property. You want something rundown, but notcompletely derelict (unless you really love a challenge)!Then you need to consider the needs and wants of the current market, and whether the place might meet them with optimal improvements.

Finally, you should consider how far you can take the property.
Some places just need a quick fix-up to gain a decent profit.
Other properties can be totally transformed, bringing them to the next level and unlocking superior profits.

Generally speaking, there are three kinds of properties that attract renovators:The ‘Patch ‘n’ Paint’ is a solid property, in good condition structurally but the decor is tired.

It needs fresh paint, carpet, fittings and fixtures, and the garden needs a tidy up.
The ‘Fixer-Upper’ is usually older and rougher than the Patch ‘n’ Paint.
The decor still needs updating, but it also needs a kitchen and bathroom makeover.
The problem child has some structural problems.

It may have cracks in the walls or need a new roof. Possibly the wiring or plumbing is uselss and needs to be replaced. These issues can be costly to repair but don’t necessarily return any value.

The ‘Knock-Down’ says it all, requiring a complete restoration or demolition. These properties often attract developers, especially if they’re in a good location, on a large block or have fantastic views. From my experience, the best bets to renovate for profit are the ‘Patch ‘n’ Paint’ and the ‘Fixer-Upper’.

The amount of renovation work you should attempt will depend on your knowledge, experience, skills and contacts, but the average person should be able to renovate these types of places without too much trouble.
Also, they tend not to have a high level of risk.

Dealing with structural defectsGenerally, I advise people to avoid properties that need serious work.

You want to spend the renovation budget on improvements that buyers or tenants can see as that’s how you get results.

Spending money on fixing defects that are unseen eats into your renovation budget and you may not see a buyer who appreciates quality for some time, therefore your profits will be reduced.

Basically, tenants and buyers expect a property to have good foundations, wiring and plumbing. They won’t pay extra for it, so the extra expenditure to fix the defect doesn’t add any value.

If you do want to make an offer on a property with structural defects you really should get a quote to find out how much it will cost to rectify the problems and factor that into your purchase price.

If the numbers still stack up then go for it. Plus, you can usually negotiate because generally, other will be scared off by the “problems”.

Don’t skimp on inspection reportsMany property investors are tempted to save a few bucks by going without an inspection report when they buy a property.

Don’t do it! Termite infestations, dodgy wiring, rotten foundations. There are many potential problems with any home that most people won’t notice.

And just one of these problems can cost you big bucks. You wouldn’t buy a second-hand car for $10,000 without a $250 inspection report, so why purchase a property for several hundred thousand dollars without an inspection report for a a little more? For your peace of mind get the inspections done. For building inspections brisbane, contact Home Inspect today or visit their web site.

Meeting market demandLet’s forget about property for a minute and think about people, because renovating for profit is a people business, not a property business.

That’s because the tenants or buyers of your renovated property are the source of your profits -from either the rent you receive or what you make when you sell it, so to maximise your return you need to create a property that tenants want to rent and buyers want to buy.

It’s the golden rule if you intend to profit from renovating houses.

If you intend to keep the renovated property then you need to research your target tenants for the area.
When you match a property to target tenants you’re less likely to have down-time with an empty house, or need to discount therent just to get people in.

Talk to property managers and find out what type of properties are most sought after in the area. Tell them you’re looking at buying an investment property in the area, and ask them what tenants prefer.

What sort of property is needed? What kind rents the quickest?In this suburb do tenants prefer houses or apartments? Do they want one, two, or more bedrooms? Do they require parking or not? You need to know these basics before you can make an informed decision on what to buy.

If you intend to sell the property after renovating it, the same principle applies but now you must consider the wants and needs of buyers rather than tenants.

While there are some similarities, there are differences you should cater for.

And finally, although there will be some features of the property you can improve, some features, such as the location and aspect, etc, are fixed.
You can do a first class renovation, but if the property backs onto railway tracks you’ll have trouble renting and selling it.

This is why property selection is critical. I always say, you can always improve a building, but you can’t improve its location.

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