Investing in Property: Are Renovation Projects Financially Worth It?
Investing in property is a potentially lucrative option, especially if you buy at the right price.
Buying a property that requires renovating is even more lucrative, as you should be able to get the property at well below market value. Look carefully at the location of the potential property, how long it has been up for sale and what property prices are like in the area once renovated. This will allow you to work out if the purchase would be financially viable.
Buying a renovation project is also ideal if you are making your first steps onto the housing ladder.
Often people take on renovation projects because they love the era that the house was originally built in. Such properties benefit from restoring original features such as cornicing and fireplaces. Period properties, sympathetically restored, can fetch premium prices.
Of course, buying a property that needs major work is a financial commitment in itself and the work really needs to be completed to a professional standard, but at reasonable cost.
Possible returns on investment
Making certain changes to your home can add value. Although not an exact science, the following can be expected following renovation projects.
Conservatory : 6-13% increase in property value.
Bathroom : 4-6% increase in property value.
Loft conversion : 10-15% increase in property value.
Extension : 15-20% increase in property value.
Get professional help
Unless you are an expert in the field of renovating property, it is essential to call in expert help for opinions on damproofing products for damp issues. Damp proofing can be a complicated business as damp can enter a property in a variety of ways, so advice should always be sought. Have a thorough survey done on your property as this will highlight some of the major work that needs doing.
Managing the project
As the manager of the renovation project, it will be your job to try and get tradespeople to stick to timescales or you are likely to fall behind time – and it is financially better for you to stay on track as much as possible.
When hiring people to undertake work, always seek three quotes from different businesses and go with the one in the middle. Cheap is certainly not always best. Seek reviews from previous customers and ask to view properties that they have recently worked on.
Set aside your budget for the renovation costs and then add another 15% on top for unforeseen costings that may occur. It is possible to start a renovation with a small budget and then apply for a loan or mortgage to cover the rest as the house value increases.
Keep your overall budget in mind when making decisions on fixtures and fittings, and don’t be swayed into buying top end options if your budget doesn’t allow it.
Kitchens and bathrooms
Once you have tackled any structural tasks and you have installed heating and electrics, most people’s thoughts turn to kitchens and bathrooms. If you are planning on selling your home following the renovation, it is important to give the design and position of these rooms lots of thought. Most potential house buyers place a good kitchen and bathroom at the top of their “most wanted” list. Ensure the design is clean and neutral to be attractive to all tastes.
Decorating your house is the part that most people enjoy, as it an opportunity to stamp your style on the property. You can also save money whilst decorating by doing the majority of work yourself.
Remember to stay fairly neutral in your choice of colours if you are hoping to sell. If you have taken on a period property, there are many paint companies that sell colours of paint sympathetic to the heritage of your house. There are also styles of wallpaper available to reflect a bygone era.
To conclude your renovation, ensure that the “finish” is of a high standard. Create a snagging list of tasks to complete.