Renovator’s Delights

After having done all of the required research and preparation, you’re ready to start shopping for a place.

This is when things get really exciting. You need to have your wits about you, as choosing a property is critical.

When you get to this stage, what you’re looking for is renovation potential.

You have to assess each property not only regarding what it is right now, but what it could be when you’ve renovated it.

The first consideration is the state of the property. You’re searching for something rundown, but notutterly derelict (unless you really like a challenge)!Next you need to think about the needs and wants of the local market, and whether the property might meet them with optimal improvements.

Finally, you should consider how much you need to do to the property.
Some properties will only need a quick fix-up to bring you a good profit.
Other properties can be completely transformed, bringing them to a far superior state and unlocking better profits.

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

It’s begging for fresh paint, carpet, fittings and fixtures, and the garden needs a revamp.
The ‘Fixer-Upper’ is usually older and rougher than the Patch ‘n’ Paint.
The decor still needs updating, but it should also have a kitchen and/or bathroom makeover.
The problem child may have some structural issues.

It might have cracks in the walls or need a new roof. Perhaps the wiring or plumbing is shot and needs to be replaced. These problems can be very costly to repair and yet won’t necessarily return any value.

The ‘Knock-Down’ requires a complete restoration or demolition. These properties often attract developers, especially if they’re in a great location, on a large block or have fantastic views. From experience, the best places for renovating for profit are the ‘Patch ‘n’ Paint’ and the ‘Fixer-Upper’.

The type of renovation work you should attempt will depend on your knowledge, experience, skills and contacts, but most people are able to do up these kinds of properties without too much trouble.
Plus, they tend not to have a high level of risk.

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

It’s best to spend your renovation budget on improvements that tenants and buyers can see immediately because that’s how you get results.

Spending money repairing 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 decide 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 so you can factor that into your maximum purchase price.

If the numbers still stack up then go for it. Remember, you can usually negotiate hard 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 foregoing 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 house that the average person won’t notice.

And just one of these problems could cost you big bucks. You wouldn’t buy a second-hand car for $10,000 without a $250 inspection report, so why would you 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 despite what most renovation newbies think, renovating for profit is a people business, not a property business.

Tenants or buyers of your renovated property are the source of your money -from either the rent you receive or the profit you make once it’s sold, so to maximise your return you need to create a home that tenants want to rent and buyers want to buy.

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

If you intend to keep the property then you need to research your target tenants for the area.
When you match a property to target tenants you’re not going to have vacancies, or need to make a reduction in therent just to get someone in.

Talk to property managers and find out what type of properties are most sought after in the suburb. 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 prefer one, two, or more bedrooms? Do they require parking or not? You need to know these facts before you can make an informed decision about 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 a lot of 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 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.

That’s why property selection is so critical. I always say, you may be able to improve a building, but you can’t improve its location.

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