Renovating Your Buy-To-Sell
For budding developers, the most common strategy for breaking into the business is to buy a rundown property for well-below its potential market value, renovate it, and put it up for sale at a considerable profit. Here are some tips on how to make your project a success.
Do Your Research
Always look at how long the property has been available for purchase. Any tenement which has been on the market for over three months should be avoided, as the lack of prior interest makes it highly unlikely that there is any profit to be made.
Don’t Buy Blindly
Before you shell out all of your hard-earned cash, you need to be certain that you’re not buying a black hole which will swallow your money and never give it back. Older properties in particular can be riddled with problems, some of them almost inconceivable to first time developers: think half of the wall coming away with the wallpaper, and holes big enough for a man to hide in tucked away behind the panelling. You cannot be overcautious. Don’t be afraid to take tradesmen of every profession with you when you visit, even if this requires umpteen trips. If you’re spending your capital, then you really ought to know exactly what you’re buying.
Ask the Experts
Although a surveyor is an obviously necessary member of your team, in the early stages of viewing a house it is often more beneficial to ask for roofers, timber and damp specialists and an electrician to take a look at the property. The charge for estimates is miniscule, with some professionals offering their initial services for free.
Don’t Bite off More than You Can Chew
Be aware of how much work will be involved. This is entirely dependent on the individual property, so make sure that you can handle it. For a good first experience of renovating, avoid wrecks and stick to properties which are merely dated. Installing a modern kitchen and bathroom, fitting new carpets and re-decorating can transform a building stuck in the seventies into the epitome of penthouse living. Updating a structurally sound building also means that you can cut costs by doing the redecorating yourself. A workman is only as good as his tools, so make sure that you get your supplies from a well-respected retailer such as Anglia Tool Centre, where the staff will have the expert knowledge to ensure you have everything you need to refurbish your investment.
Overestimate Your Expenditure
One of the most common mistakes made by first time developers is underestimating how much it will cost them to renovate their property. When you set your budget, contingency funding should be built into it – around 15% of the expected cost is a good guideline amount. If you don’t have the money to cushion yourself from a potentially catastrophic ending, where you’ve spent all of your savings and your investment is still little more than a building site, don’t despair. You can start your renovation with a small cash fund, and once you’ve redecorated and carpeted, the overall improvement should allow you to re-mortgage the property with a small profit margin. This excess can be used to install the new kitchen you’ve envisaged, or to restore the period fireplaces which have fallen to ruin.
Property development isn’t easy. There is blood, sweat and tears involved, and developers have to manoeuvre themselves through a minefield of potential problems and mistakes which are all too easy to fall into. Keep in mind that the intention is to make a profit. How you implement, manage and run your development will be the biggest determinant of your success. Get it wrong and all your project profits will disappear in a black hole constructed from delays, mistakes and heated emotions. But follow these tips and get it right, and you can add some major money to the value of your property.