Property is one of the most lucrative investment options. Renovations can breathe new life into tired and forgotten homes, hopefully giving investors a nice return on investment. However, it’s a long and often complicated process. Having the appropriate skills and knowledge is crucial to make the project a success. What are the key factors you need to consider to help you turn a profit?
Location and market
The first step is to identify an area that has the right conditions for a profitable renovation. You’ll want to buy low and sell high, so you need to find up-and-coming property markets or a cheap property in a more expensive area.
Research local council investment strategy to see where infrastructure is being developed to support future growth. This is often a tell-tale sign that property values in a location are likely to increase over the next few years or decades.
Property price and project cost
Finding the right property is tricky. You must be patient to avoid committing to a project that isn’t quite right. You should have a budget in mind to help guide your search, but there can be flexibility with prices, so you can afford to look a little above your limit.
Think carefully about an estimated project cost. This will be crucial in determining your ability to turn a profit down the road. This should involve all expenses including renovation insurance, labour, materials, equipment and some funds for contingencies.
Take the asking price and your estimated project cost, then compare that total to similar properties in that area to see how much you could return if all goes well.
Planning permission
If you’re intent on changing the exterior or extending the property then you may need to get to grips with planning permission laws. There could be additional red tape if you’re working with a listed building, new development, flat, maisonette or property in conservation areas.
Ensure that you understand the planning regulations in any region that you invest in and the impact they may have on your project. These procedures usually take time so get started as early as possible.
Renovation plans
Once you’ve secured a property, outline the renovation plans to keep track of timelines and budgets. Will you need building and structural work or just some decoration? Consider the extent of the work because this will significantly impact your budget and project outlook.
Consider how much hired help you will need. You may be able to do most of the work yourself to save money, but some specialist tasks are likely to need the expertise of a tradesperson. The costs of labour and materials are often the highest in a project, so try to build relationships with trusted suppliers and professionals.
These are some of the main factors you should consider when planning a renovation project. Turning a profit is the aim of the game and that requires detailed planning, effective project management and commercial awareness.
