Have you been considering buying a property to renovate and then sell for profit? Sometimes it can be tricky to know where to start. There are a lot of considerations, from where to buy, to proper budgeting and ensuring you’re up-to-date with any restrictions and compliance.
Here, are a few important considerations to help you buy, renovate, and sell a property for profit.
SCOPE YOUR LOCATION
Deciding on the right location is usually your first step towards finding the right property. Primarily, you’re looking for a location that has steadily been increasing in value, or one that shows signs of increasing in value in the very near future.
Some key things to look for:
Investment in infrastructure
Are new shopping centres, entertainment, or recreational centres popping up in the neighbourhood? These are great signs that indicate the area is becoming more popular.
New transport facilities
New bus terminals or train lines are a great indication of recent population growth, as investment usually occurs to support or attract a growing population.
Quality schools and childcare
Some families are willing to pay a premium on a home if it means their children can attend the best schools in their catchment area.
THE RENOVATION EQUATION
Your decision to proceed with purchasing and renovating should be based on the difference in the property’s selling price before and after renovation. Make sure you also factor in your holding costs; given the time it will take to complete the renovation and then sell the property. Talking to a highly experienced agent and accountant can greatly help here.
The bottom line dollars obviously needs to be worthwhile for you to consider taking on the renovation.
PLAN YOUR COSTS
Like any renovation, costs and time taken to renovate can blowout really quickly. A good rule of thumb is to budget 20 percent more than you believe the renovation will cost.
DECIDE TO DO IT YOURSELF OR EMPLOY CONTRACTORS
Doing a lot of the work yourself will certainly save money, but make sure it’s something you can realistically take on.
Note also that some things need to be left to the professionals by law, like any electrical work for example, so make sure you’re across these restrictions before starting. Council websites have sections dedicated to information on building restrictions, so make sure your plans comply.
Lots of risk goes into buying and renovating a home to sell, but with careful planning, research, and budgeting, it can also come with some pretty great rewards.