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Top Tips for Refurbishing Property |
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Most of us have done some kind of refurbishment on a property in the past so you can imagine it’s much more fun if you can make a large profit as a result of doing it. The stakes are high, but so are the rewards. Hopefully, the majority of tasks will turn out well, but there are lots of mistakes to be made as well!
There are various personal rewards, from the excitement of nabbing that perfect property to maximising its value through clever design and furnishings, plus the satisfaction of being answerable to no-one but yourself! At the end of the day that's probably what’s attracting you to buying and renovating property.
STAY POSITIVE
There’s been a recent spate of property pundits predicting doom, saying now is a bad time to invest in property. This isn’t true - it’s always a good time to invest in property, as long as you find the right deal.
It’s true that the UK market is changing at the moment, so if you’re looking to buy a property, do it up and sell on for a profit you’ll need to work fast to stay one step ahead of falling house prices. The safest option is to buy, add value by renovating and then rent out for a few years.
‘BELOW MARKET VALUE’
This is a phrase that you’ll be hearing a lot of at the moment because it’s the best way to ensure you can make a profit from property in the current market. Below Market Value property is often on the market because it has been repossessed or is a 'distressed' sale where the seller wants a quick sale to be rid of property they can no longer afford to keep.
However, agents have also been known to accidentally undervalue a property, so if you make it your goal to know the market better than they do, you can also take advantage of these opportunities.
IS REFURBING RIGHT FOR ME?
As with most property transactions there is an element of risk with refurbishment so you have to be able to deal with any resulting pressures and responsibilities.
It’s impossible to overstress the importance being methodical. Before you commit to a refurb project you must fully understand your level of financial commitment and any other likely demands on your time and financial resources.
Obviously the more you can personally put into the project the cheaper it is likely to be and your building team will no doubt prove more reliable, so it is important to decide if you are willing and able to commit the required time and energy. This may mean literally living in the building, to be a constant presence and manage the builders.
FINDING THE PERFECT PROPERTY
This takes a lot of legwork and even more stubbornness.
This is often the hardest part of the whole process as you’ll be fighting off hundreds of other investors for a limited number of worthwhile investments, and they won’t all play fair. Keep in mind a very clear picture of the kind of property you're looking for, and then focus.
The best way to ‘sort the wheat from the chaff’ is to view LOTS of properties. It’s not simply a matter of finding an elusive hidden gem, nearly all properties are advertised and you won’t be the only one searching for a bargain. Take time to familiarise yourself with a few markets so you know how much to pay and when to walk away.
If you have your eye on a particular property and it’s sold to a fellow investor, try phoning the agent after a couple of months to see how the sale is progressing. You never know, there may have been complications that mean you can proceed with the purchase after all.
WHAT TO LOOK FOR
Price: Get your finances in order before deciding on a strategy.
Neighbourhood: The old adage of location, location, location still rings true. Look for up-and-coming areas as this can make all the difference to your profit margins.
Your Client: Consider your area, is your target market made up of families, students, or city professionals? Keep costs down by tailoring the refurbishment towards the kind of people who are likely to be most interested in your property. Remember that refurbishing a property for tenants is a whole different ball-game to refurbishment for resale.
WHERE TO LOOK
Auctions: There’s been a huge surge in the number of repossessions in the UK following the credit crunch and some analysts predict the number to reach 45,000 by the end of the year. Read our Top Tips for Auction Success.
Estate Agents: Build a rapport with your local agents and make sure they know exactly the kind of property you're after. By checking with them on a regular basis you’re sure to remain high on their list.
Local Newspapers & Freebies: Some owners of rundown properties won't want to see what value their buildings do have gobbled up by sales commission so it's always worth browsing the adverts section to see what's on offer.
TAKE CARE TO AVOID…
Leaping before you look. We can’t say this often enough – due diligence is key in any property purchase so plan, research, crunch those numbers and repeat ad nauseam.
Agents trying to offload 'turkeys'. Remember that if something seems too good to be true, it probably is.
Being over-ambitious. It’s especially important to think long-term in the present property climate, so stay calm and don’t get swept up by persuasive sales pitches.
Bearing all this in mind you should be able to find an ideal refurb project in the current market… we wish you well.
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