Renovator’s Delights

After having done all of the necessary research and preparation, you’re now ready to begin shopping for the perfect property.

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

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

You have to assess each property not only on what it is right now, but what it could be when you’ve done your magic to it.

The main consideration is the condition of the property. You want a place that needs work, but nottotally derelict (unless you love a challenge)!Next you will consider the mood of the current market, and whether this property might meet them with optimal improvements.

Finally, you need to consider how much you need to do to the property.
Some places will only need a basic style change to gain a good profit.
Other properties can be quite transformed, taking them to the next level and unlocking superior profits.

Generally 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 faded.

It will respond to 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 will still need a revamp, but it should also have a kitchen or bathroom makeover.
The ‘Fixer-Upper’ has some structural issues.

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

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

The type of renovation work you should attempt depends on your knowledge, skills, experience and contacts, but the average person are able to do up these kinds of properties without too much trouble.
Also, they don’t tend to have a high level of risk.

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

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

Spending money fixing defects that are not seen 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 must get a quote to find out how much it will cost to rectify the problems and factor that into the purchase price.

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

Don’t skimp on inspection reportsMany property investors are tempted to save a few bucks by foregoing inspection reports when buying a property.

Don’t be tempted! Termite infestations, dodgy wiring, rotten foundations. There are many potential problems with any structure 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 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 must create a place 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 suburb.
When you match a property to target tenants you’re not going to have down-time with an empty house, or need to cut therent just to get people in.

Build a good relationship with 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 in short supply? 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 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 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 the location and aspect, etc, are fixed.
You can do a first class renovation, but if the property backs onto railway tracks you can expect to trouble renting and selling it.

That’s why property selection is so critical. I always say, you can improve a house, but you can’t improve its location.

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