Is refurbishing property the right investment for you?
If you’re good at DIY and relish a project, then refurbishment property could be a good investment area for you.
Buying a home that needs extensive work is not for everyone. But if you think you can handle it, then doing up a property so that it’s not just habitable but intensely marketable -either for selling or rent – could be the way to go.
Not only do you have the satisfaction of a job well done when you see the transformation you’ve made, it’s also a great way to boost your income.
Are you ready to refurbish?
It’s a popular sector of the property market; turn on your TV and you’ll be sure to find a home renovation show on one of your channels. The desire to refurbish properties is always there.
But before you undertake the major refurbishment of a property, take the time to consider if you have the right skills and mindset for the job.
- Are you interested in interior design?
- Do you enjoy project management?
- Have you got the patience for a long-term project?
- Do you have any building skills yourself?
- Can you quickly form a network of tradespeople?
If you answer mainly yes to these questions, then there are plenty of abandoned, derelict and dishevelled properties out there to choose from.
Where to find a refurbishment property
- Websites will use terms such as ‘unmodernised properties’ to advertise available refurbs.
- Property auctions are excellent places to pick up a property bargain as in most cases the seller is looking for a quick sale. Get the catalogue prior to the auction and if you spot a potential property do plenty of research into the location and house before thinking about putting in a bid.
- Estate agents are not fond of listing refurbs so it may be best to give them a ring and ask them to alert you if anything comes up.
- Land Registry is useful if you happen to see a derelict property but don’t know who to contact for details. You may be able to find out who owns the house by checking out the appropriate HM Land Registry.
What is your planned outcome?
You need to assess the current market and figure out what is most in demand. Your objective should be to make the house or apartment appeal to as large a number of potential renters or buyers as possible.
Before you go overboard buying expensive top-of-the-range fixtures and fittings for your property decide on your market. Unless you’re planning to place the property at the luxury end of the market, there’s no point in spending a fortune on gold taps. If you’re ultimately going to let to students, this will be a complete waste of money.
Take all this into consideration when you select a suitable refurb project and be realistic about the amount of work that needs to be done – there’s a huge cost difference between a property that needs a bit of rewiring and a new kitchen versus one that doesn’t even have a roof!
Make sure your finances stack up
Some mortgage providers will be reluctant to lend for a refurb while others may only give you a certain percentage of the mortgage. This could mean you have a substantial shortfall to make up yourself. Bear this in mind, before you put in an offer.
You also need to know if you are going to require planning consent from the local council before making any major renovations.
Next, if you’re not going to do the work yourself, make sure you know enough reliable builders and contractors. Factor in the time you will need to spend chasing up materials, managing contractors and maintaining your cash flow.
Remember that you’re in this to make a profit, and that time is of the essence. To avoid delays, write up a contract for the builders that includes penalty points for milestones missed.
Finally, don’t get so carried away with the project that you lose sight of your planned outcome.