Buying and refurbishing a rundown property
If you are considering buying and refurbishing a rundown property , as an investment opportunity either to turn around quickly and sell or to keep as part of a rental portfolio read our guide to get you started on what to buy, where to buy it and what to do with it once it’s yours!
First things first you need to find a property to invest in and you need to know which area you wish to buy in. The best renovation job in the world could end up making a loss if it was too expensive in the first place or in the wrong area, so take the time to research. Should you intend to rent the property think carefully about the location you buy in, transport links are vital and close proximity to hospitals or universities is essential if you are aiming at shared/student lets. Contact estate and letting agents and do some online research to find out what the demand is like rental property is in the area you are considering to avoid being left with perfectly refurbished but empty property on your hands.
Ideally if you are relatively new to property refurbishment projects you want to opt for properties which are habitable but run down, steer clear of properties that need complete gutting until you are more experienced and have good contacts with reputable tradesmen.
Look out for those well looked after places that haven’t been touched since 1970. Let’s be honest this kind of property doesn’t give viewers that “I want to live here!” moment. The work involved in bringing the property up to date can be inconvenient and therefore off putting especially for families so many buyers are put off what could be a bargain. As an investor discount that avocado bathroom suite, terrible lino and woodchip on the ceiling… take a moment to visualise the potential of the property given a little TLC.
Financially it may sound blindingly obvious but the property you decide on as your investment buy needs to be cheaper than purchasing a freshly refurbished alternative taking into account all the costs of the refurbishment. After all you are investing to make a profit! Obviously the finances will vary for each project but if you look for a minimum 20% profit margin you shouldn’t go far wrong.
Once you have made your purchase draw up a renovation plan with all the costs involved and stick to it, there is no point in doing it at all if you are going to chop and change your plan with every purchase! Sometimes adjustments need to be made but generally a well researched plan should stand true throughout the project. When starting your plan be sensible about the work that needs doing; yes the garden may need a major facelift but is a raised deck and built in BBQ really going to add value?
Go for a modern neutral finish throughout and whether you are looking to sell or rent at the end of the renovation your property should end up being attractive to both markets. Keep in mind that this property is not your home, it can be all too tempting to splash out on your project, yes you want good quality but there is a time and a place for that stunning free standing bath and your investment buy is not it!
Refurbishing a rundown property doesn’t have to be stressful. Plan well, set realistic goals, leave plenty of time and enjoy.
Written by Sarah Male, Urban Sales and Lettings