Property renovation can be a lucrative investment that offers a fantastic return. However, renovations can be challenging and it’s easy to end up losing valuable time and money by investing in a bad project.
To make a profit from home renovations, you must do careful planning and plenty of research. Therefore, it is vital to know some useful tips on how to make money from property renovation.
Research the neighborhood
The location you choose will play a crucial role in how profitable your renovation project is. For that reason, you must conduct thorough market research on any neighborhoods you’re interested in. You should aim to purchase property in a desirable neighborhood with plenty of sought-after amenities like good local schools, doctor’s surgeries, and shopping centers. Keep in mind that you can’t change a street or area, but you can completely transform a house with repairs and improvements.
You also need to determine the average sale price of homes in the local area. This will help you get an idea of the profit you’re likely to turn over from your investment. You can easily obtain this information by asking a real estate agent to obtain a Multiple Listing Service (MLS) report for you.
This will give you details of any properties that have been listed and sold in the local area. It is also a good idea to try and find out what house prices are likely to be like in a few years. For instance, house prices are likely to go up if a brand new state-of-the-art hospital is due to be built in the area in a couple of years. You can find valuable information on upcoming market trends by reading local newspapers, speaking with real estate experts, or researching online.
Find the right property
Once you’ve decided on the neighborhood you want to invest in, you will need to find the right property to purchase in that area. You need to consider how much time and money you have available to put into the renovation project.
Some properties only require minor improvements to get them ready for resale. However, these properties typically turn over a small profit. Whereas, derelict buildings while may require years of renovation works could give investors a substantial return on investment. If you’re new to property renovations, then professionals recommend choosing a smaller project that is fairly low-risk.
You should start by calculating your After Repair Value (APV). Experts at fitsmallbusiness.com explain how the APV provides an estimate of the future value of a property once improvements have been completed. You can calculate the APV of a property by adding the value of renovations to the purchase price of the property.
Make sure you bring your contractor to any viewings, so you can work together to identify what work will give you the best return on investment. Some popular renovation projects include kitchen remodels, replacement windows, and bathroom upgrades.
Hire your renovation team
It is essential that you hire a team of contractors with the skills and knowledge needed to carry out the property renovations safely and to a high standard. Make sure you consider your options carefully and ask friends, family, and neighbors for recommendations of good contractors in the area.
Once you have a team in place, check in on them regularly to get updates on the progress and expected completion dates.
You also need to consider the cost of any additional equipment that may be needed during the renovations such as scaffolding. Several home improvement projects require scaffolding to be completed safely. This includes extension projects, loft conversions, and painting the exterior of the property.
Keep in mind that scaffolding is essential for any renovations that require working at height because of health and safety laws. If you do require scaffolding for a renovation project, then Global Scaffold offers an extensive range of scaffolding available on their website, so be sure to check out what Global Scaffolding sales you can get.
Set a realistic budget
You must be realistic with your budget and be aware that renovations typically cost more and take longer than you expect. According to Finder, property experts recommend that you should aim to spend a maximum of 10% of the property value on renovations. Make sure you remember to factor additional costs such as the deposit, stamp duty, and mortgage repayments when calculating your budget.
You must allocate your budget towards different aspects of your renovation project. Monitor your expenses carefully and refer to your budget regularly.
Remember that overspending on your budget will eat into your profit margin, so it should be avoided whenever possible.