If you are aiming to generate some serious cash from your next reno project, then be sure to pick a property that will maximise your potential profit
Some of the commoner renovation strategies, such as modernising your existing kitchen or refurbishing the yard, can return some encouraging increases in value. However, the real profits lie elsewhere.
Have you ever considered purchasing a property based specifically on its renovation potential?
For many property investors and home buyers, renovation is no longer an afterthought but a major motivating factor at the point of purchase.
Some properties hold greater renovation potential than others and so choosing the right property can mean the difference between making a few thousand to making tens of thousands of dollars in profit.
If you are really looking to turn over some serious cash on your next reno, keep the following in mind.
What to look out for
Buying below market value and completing an extensive renovation is the most effective way to turn over a sizeable profit in a matter of months.
This strategy carries more risk than renovating the family home, but the potential rewards of doing so are certainly attractive.
When using the ‘buying to renovate’ strategy, it is important to remember that you are ‘on the hunt for a dump’. You want to purchase a home that lends itself quite clearly to renovation and shows very few signs of previous improvement.
Be sure to thoroughly assess the home’s floor plan. You are after a flexible plan that could be modified to accommodate stylish, open plan living.
Also, take note of the number and size of the bedrooms and bathrooms as well as the kitchen and other living areas. Generally speaking, the larger the home, the more money there is to be made.
When buying to renovate, however, there is nothing more important than setting yourself a realistic budget that offers both flexibility and longevity.
A key thing to remember when renovating is that anything which can go wrong quite often will, so it pays to have some extra cash hidden away to deal with any problems that may arise.
When it comes to location, the property should be within close proximity to amenities such as schools, shops and hospitals. Convenience for transport hubs such as rail stations and bus stops are also important considerations.
What to avoid
When buying to renovate, nothing is more important than knowing what you are actually purchasing.
Units and heritage-listed properties are not the best homes to purchase when using this strategy as they often have restrictions or even extremely strict guidelines on what can be done in a home modification or renovation.
Properties that are not in sync with the surrounding neighbourhood should also be avoided. If, for example, a majority of the houses nearby have pools and yours doesn’t, then the value of the home will always remain below market value.
Finally, pest and building inspections are a must. As the aim of the game is to buy low and sell high, you want to be sure you are not forking out tens of thousands of dollars on repairs as opposed to renovation – or still worse, to find your new property is riddled with termites.