Renovating an Old Home: 5 Steps for Achieving Maximum Profit
Renovating a rundown ‘dwelling for profit’ can be a great investment when done the right way. Just the thought of reselling a home for much more than you initially paid for it sounds very appealing. That being said, house flipping can go wrong if you’re not careful, so it pays to learn some tips and tricks on ensuring your project’s success.
If you’re looking to renovate a fixer-upper for the first time in the near future, here are five steps you’ll need to take in order to maximize your profit.
Select the right house
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Deciding which house to renovate is very important if you’re looking to get the most money out of your renovation project. To narrow down your options and select the best property to invest in, do what seasoned house flippers do – go to the best street in the neighborhood and look for the worst house you can find.
Purchasing a rundown dwelling on a nice street gives you a wide range of options, and there are more ways to add value to the house as well. The current condition of the property will ensure an affordable price while also eliminating competition as most buyers look for houses in good condition. Keep your eyes open as there are houses waiting for their potential to be discovered, but not every prospective buyer is experienced enough to spot it.
Consider hiring professional help
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Depending on the country you live in, even a fixer-upper may come with a hefty price tag, especially if it’s located in an attractive neighborhood. This is not uncommon in countries like Australia which is, according to a recent survey, one of the places with the most expensive housing market. Australia has two of its major cities, Melbourne and Sydney, ranking high up the list when it comes to un-affordable housing. In order to purchase the property they can ‘flip’ for a reasonable sum, hiring buyers agents from Sydney has become a common practice among Australian real estate investors. Buyers agents can be of great help to inexperienced buyers when it comes to negotiating the price. Moreover, they know all the tricks of the trade and will use their knowledge in the entire process to help you strike a great deal under the right terms.
Improve the state of your purchased property
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When renovating an old property, it’s easy to get distracted by all the finishing touches you are planning on installing. However, before you get to choose the tiles for the bathroom and the color of the walls and countertops for the kitchen, you first need to tackle the essentials in order to ensure the property is in good condition.
Start by inspecting the house for issues that you need to resolve. Consider the security of your purchased property and take the necessary steps to ensure it’s safe. If the house is damp and there’s mold or the house feels cold, you’ll need to fix those problems. The same thing goes for roofing, insulation, ventilation, plumbing, and electrical wiring. Replace any old windows and doors that may impact the household’s energy bills, and check for leaks to avoid having to lower your asking price because buyers will notice these things. Ideally, your house should be updated in terms of energy efficiency, as it is something most home buyers are looking for when purchasing a property.
Install or update the central heating system
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Aside from tackling structural problems and ensuring all the basics are covered, you also want to invest in one renovation project that is crucial for designing a comfortable and inviting home – central heating. Whether you update the central heating or need to add it, it’s an investment that is bound to give a significant boost to the value of the house compared to how much it costs.
However, if you intend to invest in central heating, strive to improve the house’s energy efficiency in general. Check the efficacy of the existing boiler and see whether it needs to be replaced, and if possible, install some underfloor heating as well, especially in the bathroom.
Tackle remodeling
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After all the essentials have been tackled, depending on your budget, you should consider making a couple of upgrades that will boost the value of the property. Think about converting a loft or basement, adding an extra bedroom, or tackling a kitchen or bathroom remodel.
Whichever route you take, you should try to make the most of the usable square footage and, if the budget and local building codes allow, create additional living space in order to appeal to a wide range of homebuyers.
Renovating an old house with issues sounds like a lot of work to most people, but for some, a fixer-upper can be an actual gold mine, one that can bring them high returns if they only make the right investments.
If you’re feeling ready to take the plunge and invest in real estate, stick with these rules as they’ll ensure you make all the right steps and maximize your profit from a fixer-upper.
Author: Derek Lotts.
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