renovating property

How to Make a Profit Whilst Renovating Property

With the property market looking healthy at the moment and house prices predicted to rise throughout 2018, is now a good time to invest in a renovation project? Such an investment requires careful consideration and planning, however. Here are our top tips on how to make a profit when investing in a property renovation project.

It’s all about location

Finding the right location will make your chances of a profitable, quick sale much higher. You may already have an up-and-coming area in mind, having noticed positive trends in property being sold quickly and for a good price, boosting your confidence to invest there. If not, get out and do some thorough research on a few different areas. Often it’s not about looking for property in the cheapest or most expensive areas, but noticing which areas are growing in popularity and where people want to live – whether it’s for easy commuter access, in the catchment area for a good school or in a popular student locale.

Scale of project

Be clear and honest with yourself on the type of renovation project you can carry out successfully. How much time and money you have to invest will shape this important decision. In a property that only requires cosmetic improvements, you will turn the work around quicker but might not add as much value and perhaps make less return on your investment. If you are new to property investment or home improvement work, this might be a good scale of project to start with. Properties that need completely redone, or perhaps a new kitchen or bathroom putting in, will take more effort, time and money but could give you much more in return when it comes time to sell.A good rule to follow is the property developers’ rough calculation, where you want the final value of a refurbished property to be at least the purchase price, plus the cost of work, plus 20 per cent.

Set a budget

Plan carefully and consider all of the costs associated with the purchase of your investment property. This should include all the expenses incurred when purchasing the property such as legal fees and survey costs on top of any materials, fittings, contractor fees or time spent working on the property yourself. There are also costs to do with safety and legal responsibilities, including gas safety certification, energy performance certification. If you are investing in a buy-to-let property, remember ongoing maintenance and utility costs too.

Get a survey

Getting a property survey, on top of any mortgage lender’s valuation reports, is a particularly important step before investing in ‘fixer-upper’ properties as it helps to rule out any potential structural issues that may be lurking. This will help you steer away from any properties that have the potential to turn into a financial nightmare as they require too much work, or that may even be difficult to sell on in the future.

Keep motivated!

Sometimes renovating can feel like one step forward, two steps back. You complete one room only to begin another, or start one job to uncover ten more to do! If you are carrying out the renovation work yourself you need to meet any frustrations head on and keep yourself motivated, same goes for project managing any work you are contracting in from tradespeople. Keep your planning, budget and aims in mind and be realistic that issues can pop up along the way, pushing a project back or requiring more from the budget. Going into a new investment with your eyes wide open will help keep you on track and on the road to a successful future sale.

As one of West of Scotland’s longest established estate agents, we’ve helped families across the country buy, rent, let and sell properties quickly, and with the minimum of hassle. Get in touch with our team on 0333 241 3333 today or send us a message to find out more.