Buying a house in order to sell for a profit has become quite popular thanks to the plethora of property shows on British TV. Is it really as easy as they make it seem?
If you're lucky you can make a profit on almost any property if you are willing to sit it out and wait for the market to rise around you. However if you're after a quicker profit you need to be a little more cunning.
Buying a property to sell for a profit is quite achievable if you're willing to put some time and effort into it. Firstly you will need to buy a property that sits at a price far below the average for the surrounding area. This will usually be a home in need of modernisation and this can vary from property that needs major structural repair to homes that simply need bringing up to date with new décor, fixtures and fittings. You should avoid the former if you intend to make a profit as this type of property can consume a budget surprisingly quickly.
You may find making use of a home improvements company cost effective on large scale projects, especially if you intend to manage the project whilst maintaining a full time job.
To make the process a little easier I've split it into 4 sections which will target the key areas of renovating a property for profit.
1. Finding a property to develop
Firstly you will need to find the property, you should pick a target area in which to search for property or you can simply look in the area surrounding your own home. If you can spot an area on the up in terms of popularity you may be able to take advantage of the ensuing rise in property prices.
A good way to pick up a bargain is to purchase the property at auction. You should be careful to at least view the property from the outside if possible before bidding to ensure you are not buying a major renovation project.
The best type of property to pick up is one that is simply in need of some modernisation and it can be quite easy to find homes that have been left with their original 60's or 70's décor (beware the dreaded artex plaster that can seemingly adorn every surface of these properties). You will usually need to replace the bathroom and kitchen fittings and bring the décor up to a more modern standard. You may find the layout slightly unusually in properties of this age and a small amount of rearranging may be required to increase functionality.
2. Planning
Once you have found and purchased the property you will need to put into place a plan of action before you start anything. If the project is a little more large scale you should employ an architect as you will usually find this service more than pays for itself.
You should always set aside a contingency fund as you never know what unexpected costs may arise. You should set a budget for all areas of the renovation including; building works and materials, kitchen and bathrooms, decoration, carpets and flooring (an area many forget), garden (if applicable) and mortgage and solicitors costs.
Before deciding this you should work out how much you can sell the property for once completed and factor this into your estimations. How much profit you make depends on how much work you are willing to put into the property yourself.
Remember if you can add an extra bedroom or bathroom to a property you will usually increase the value of the property quite significantly. It is best to look at similar property in the area with these additions to see how much extra they are selling for before you make a decision. Adding a loft conversion can add up to 30% but can be almost as costly in some cases.
You may wish to enlist an advanced property solutions company to achieve a high quality of workmanship in key areas such as the kitchen and bathroom. Paying a little extra in the beginning may be quite cost effective in the long run if it helps to achieve that all important sale.
3. Keeping it simple
A key element of property developing is to keep it simple, you should never apply your own taste in décor to the property and it is important to remember not to get too emotionally attached to the property. This has been the downfall of many a new property developer. Remember, you want the property to appeal to a wide market so the décor should remain neutral but smart to allow the viewer to mentally place their own stamp upon it.
Decorating a room in a colour or style that you are fond of is certainly the wrong way to go. You may like it but will everyone else? It is best to keep reminding yourself that this is not your home. Be careful not to get carried away buying gadgets that you've always wanted like that multi-room sound system, you might think it's brilliant but will it really add that much onto the properties price tag? The answer is usually no. You need to think of your potential purchaser, is the property ideal for a first time buyer, would it suit a young professional person or is it a large family property? You should tailor your décor and fittings to the correct market. What use will a 3 bedroom house with only a shower be to a family with three children? You need to keep your potential buyer in mind at all times.
4. Kitchens and bathrooms
The kitchen and bathrooms are a key selling point in any property, you can have the best finish possible but if you add a poorly fitted kitchen you will lose your potential buyer as soon as they've walked into the room.
The kitchen is the hub of most family homes; you should seek a professional finish with practicality being of the utmost importance. You don't have to spend a lot of money to achieve a good finish, as long as your kitchen units and work surface are modern and neutral you should be fine.
You may find it more cost effective to bring in kitchen fitters to achieve the professional look. In the long run it can work out to your advantage and they will able to help you make the best use of the space you have.
This is also true of the bathroom; this room can make or break a sale if the buyer does not like the style or fittings. You should always try to keep the bathrooms in a property modern and neutral; any way of creating a sense of more space is always a good thing. An addition such as a separate shower unit can give the room that extra usability and appeal without compromising on too much space but should only be installed if the bathroom can easily accommodate it.
As a good rule of thumb you should have at least one bathroom for every three bedrooms in a property. If you can add an on-suite or cloaks room this will increase the price you can ask for the property but should not cause any rooms to become small and impractical.
If you follow the above advice you should find the process of renovating a property a little easier. Above all remember to keep things simple and maintain a neutral and modern décor to appeal to a wider range of buyers.
