Renovator’s Delights

After having done all of the fundamental research, you’re ready to begin searching for a place.

This is when things get really exciting. You have to 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’re looking for is potential for renovation.

You need to assess each property not only regarding what it is right now, but what it could be once you’ve done your magic to it.

Your main consideration is the condition of the property. You want something rundown, but notabsolutely derelict (unless you really love a challenge)!Next you need to think about the mood of the local market, and whether this property will meet them with optimal improvements.

Finally, you should consider how far you can take the property.
Some places just need a basic style change to bring you a good profit.
Other properties can be quite transformed, taking them to the next level and unlocking better profits.

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

It needs 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 needs a revamp, but it also needs a kitchen and/or bathroom makeover.
The ‘Fixer-Upper’ has structural issues.

It may 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 fix but don’t necessarily add any value.

The ‘Knock-Down’ says it all, requiring a complete 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 bets for renovating for profit are the ‘Patch ‘n’ Paint’ and the ‘Fixer-Upper’.

The amount of renovation work you should do will depend on your knowledge, experience, skills and contacts, but most people should be able to renovate these kinds of places without too much trouble.
Also, they don’t tend to have a high level of risk.

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

It’s best to spend the renovation budget on improvements that buyers and tenants can see immediately as 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, 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 need to 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 going without inspection reports when buying a property.

Don’t do it! Termite infestations, dodgy wiring, rotten foundations. There are many possibilities of problems with any building that the average person won’t notice.

Remember, 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 that just costs 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 demandNow let’s 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 must create a property that tenants want to rent and buyers want to buy.

It’s the golden rule if you want 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 down-time with an empty house, or need to reduce therent just to get people in.

Build a good relationship with property managers and find out what type of properties are most desirable 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 in short supply? What 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 should know these basics before you can make an informed decision about what to buy.

If you intend to sell the property once you’ve renovated 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.

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 a railway line you can expect to 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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