Are you thinking of flipping a property? Don’t make a start until you have read this comprehensive two-part guide to renovating for profit.
The idea of buying a home, renovating it and selling for oodles of cash is so appealing, especially if you love watching reno shows on TV! However, the TV shows don’t let you in on the real costs and pitfalls.
I caught up with serial renovator and director of The School of Renovating Bernadette Jansen on my podcast… it was such a great and in-depth discussion that I have broken her advice into two articles for you.
Here’s part one:
How to renovate for profit
Flipping a house can make you a tidy profit but if you get it wrong you can end up in the red. What changes you make, how much you spend and where you buy the property should all be taken into consideration before you buy.
Our renovation expert recommends the following:
- Know the market
Bernadette says, “If you are planning to renovate for profit, you really need to understand the market in the area. This really relates to buying any sort of property, even your own family home.”
Take the time to research the market in the relevant area. See what is selling and for how much. There isn’t much point in renovating a large family home in an area that is seeing growth in young singles.
- Explore the potential
Buying property is a huge expense so you need to know whether the property you are buying has the potential to deliver.
- Can you add a bedroom or bathroom?
- Is there space for a deck for outdoor living?
- Can you open up the kitchen?
Questions like these will let you know the potential of the property for renovation. Look at the existing floor plan to see where changes are possible. If the floor plan needs to be completely reworked, a renovation might not be cost-effective.
- Check the condition
The condition the property is in will heavily dictate the amount you will be spending on any renovations.
- Does it need an electrical upgrade?
- What condition is the plumbing in?
- Are the foundations sound?
- Is the roof in good repair?
The worse the overall condition, the greater the renovation expense. Your decision now comes down to your budget and the asking price for the property. A low asking price might make up for poor conditions if time is no concern.
- Review the sewer plan
“If you’re planning to do a little extension, find out where the sewer runs,” says Bernadette, “Sometimes people make their own additions but don’t do so legally. As a result, you’re inheriting their problems.”
You need to make sure that you aren’t going to have to make any major overhauls to the sewerage and plumbing on the property. Plumbing costs like this can blow the budget even on the simplest renovation job.
Making a start
Renovation doesn’t have to be a huge job. Even small changes can make all the difference. Bernadette says starting is as easy as “Cleaning up and tidying up so the place looks like it’s loved.”
Besides cleaning and tidying, fixing the street view is the next step. Bernadette says that curb appeal has a big impact when the time comes to sell, and making sure the property looks good from the street is a must.
If tidying hasn’t done the job, then it is time to address the other basics:
- Fresh paint
- New carpets
- Replace window dressings
- Update the lighting
- New fixtures where necessary
These are all cheap and easy jobs that can make a tired old home look new again. If you have ticked all the boxes above, then you might already be on your way to a tidy profit. If you have bigger tasks in mind, then keep an eye out for the next update on renovating for profit, when Bernadette will guide us through more major renovations.
Contact Thorpe Conveyancing for more information on all things real estate.