Are you a first-time investor looking for property to renovate?
Investments in properties can result in huge financial gains. However, it’s not always easy to know the best way to renovate a property in the most cost-effective way.
Let’s take a look at the different types of investment in property to renovate. There are two main types of investments in property that require renovations afterward.
The first of these is when people choose to buy into run-down or old properties that need a lot of work. They purchase the property to then renovate and later sell at a higher price. This type of investment is often called a “fix-and-flip” – the renovation is the “fix” and the selling is the “flip”.
The second type is when people purchase a property to renovate, and then rent it out to tenants.
And yet, knowing how to buy a property to then renovate is only the first step. It’s also essential to know how best to renovate a property to add value. This is the case whether you want to sell the property afterward, or rather, to rent it out.
This is why we’ve put together the top 7 tips for renovating a property.
1. Don’t Overspend on Materials and Furnishings
If you are buying or renovating a property, you need to make financial savings wherever possible. This means that every dollar you spend on the renovation comes off your profits at the end.
It’s important not to overspend on expensive materials and furnishings. This is particularly true for rental properties. This is because tenants are probably not going to take care of the property to the same extent as owners.
However, you may also want to avoid the cheapest materials, since you may find yourself replacing and fixing materials often. Of course, the property has to be desirable and liveable for tenants, but don’t spend money unnecessarily.
On the other hand, if you are looking to sell a property you have renovated, you may consider paying a bit more for higher quality. This may increase the price you can get for the property, and thus, your profits.
2. Establish a Budget for Renovations
It’s easy to overspend on renovations if you don’t have a clear understanding of how much you’re willing to spend. And once you’ve come up with a budget, make sure you stick to it. If circumstances change, and you need to adjust the cost of the renovation, then try to compensate for this by saving on non-essentials.
The most successful property investors analyze every detail of the investment costs against the value of the property. This should be calculated before you purchase the property. This way you can determine how much your return on investment will be in advance.
3. Notify Residents of Renovations
Part of being a successful and serious property investor includes doing the right thing. For example, notifying the current residents or tenants of the property about the renovations due to be made.
A reasonable time frame of notice ranges from two to three months before the start of the renovation. This is even more important if the renovation will take place while the property continues to be occupied.
The optimal time to renovate a property is the time between old residents moving out and new residents coming in. However, this is not always possible in practice.
4. First Impressions Matter
Although it may be necessary to renovate the entire property, perhaps the most important part of the renovation is the front yard and the exterior of the property.
People looking to rent or buy your property will make their first impressions as they approach the property. An attractive and practical front yard is the perfect opportunity to make a great first impression.
Another important factor in first impressions is whether the property is clean. In comparison to the cost of the renovations, ensuring the property is clean and tidy costs almost nothing. Despite this, potential renters and buyers could be instantly put off by a dirty and untidy property.
5. Kitchens and Bathrooms
Kitchens and bathrooms can make a huge difference to selling or renting your property. Research by HSBC suggests that a renovated bathroom could increase the value of a property by up to 6%. That could be a significant property simply from a bathroom renovation.
Many people are attracted by modern bathrooms and kitchens. However, there are many ways of updating the bathroom and kitchens in cost-effective ways.
For instance, by getting rid of old tiles and wallpaper and bringing in new countertops and cabinets with a modern appearance. Many investors opt to simply replace the handles and repaint cabinet doors.
And if it is essential to replace cabinets, bathtubs, sinks etc. then there is no need to purchase custom-made. The off-the-shelf models are much cheaper and can be of equal quality.
6. The Difference of a Fresh Coat of Paint
It’s amazing what a fresh coat of paint can do to a room. It can have the effect of making an old property, look brand new.
There is probably no better investment you can make to your property than to paint all of the walls of the house.
7. Buying a Property to Renovate? Keep it Simple
Many first-time property investors attempt large scale and ambitious renovation projects. While a swimming pool may appeal to some buyers, this could count against you.
Many buyers may be concerned about the resale value of the property, the cost of maintenance or even the danger of a swimming pool.
Therefore, it’s usually better when you buy a property to renovate, to keep the repairs and changes simple and avoid risky and large-scale projects.
As a property investor, there’s a lot to consider when it comes to renovating your properties. But with these 7 tips in mind, you’ll make the most out of your investment.
No matter which path you choose, it’s vital to insure and protect your rental properties. Call us at 800.644.6443 or fill in our contact form so we can help you with all your property concerns.