Renovator’s Delights

This entry was posted by on Saturday, 3 November, 2012 at

After having done all the basic research and preparation, you’re ready to begin looking for the perfect property.

This is where things get really exciting. You need to keep your wits about you, as property selection is critical.

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

You need to assess each property not only on what it is right now, but what it could be once you’ve renovated it.

The main consideration is the state of the property. You’re searching for a place that needs work, but notabsolutely derelict (unless you love a challenge)!Then you will consider the needs and wants of the local market, and whether the property will meet them with your improvements.

Finally, you should consider how much you need to do to the property.
Some places just need a facelift to bring you a tidy profit.
Other properties can be quite transformed, taking them to the next level and unlocking higher profits.

Generally speaking, there are three types of properties that attract renovators:The ‘Patch ‘n’ Paint’ means it is a solid property, in good nick 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’ will generally be older and in rougher condition than the Patch ‘n’ Paint.
The decor needs a revamp, but it also needs a kitchen and/or bathroom makeover.
The ‘Fixer-Upper’ often 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 repair and yet won’t necessarily return a comparable value.

The ‘Knock-Down’ requires 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 places 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 do up 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 structural work.

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

Spending money on 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 need to get a quote to find out how much it will cost to rectify the problems so you can factor that into the maximum purchase price.

If the numbers still stack up then go for it. And, you can usually negotiate hard 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 going without an inspection report when they buy a property.

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

Remember, 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 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.

Tenants or buyers of your renovated property are the source of your money -from either the rent you receive or what you make when you sell it, so to maximise your return you need to develop a property that tenants will rent and buyers want to buy.

That’s the golden rule if you want to make a profit renovating houses.

If you intend to hold onto 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 cut therent just to get someone in.

Talk to property managers and find out what type of properties are most wanted 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 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 should know these facts 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.

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 train tracks you can expect to trouble renting and selling it.

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


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