7 tips for first-time renovators
Renovating for profit has become big business over the past decade. With so-called reality shows making it look easy and worldwide recession slowing the new housing market, fixing up investment homes has become a profitable business – but it can also drain your savings and patience. Here are seven tips for success.
Blogger: Jane Eyles-Bennett, Hotspace Consultants
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Know your market.
Before you purchase your first investment property, make sure you know what you are getting into. Read about property investment, drive around the neighbourhood and go to open houses for homes available for sale in your area. Without first doing your research, you will have a difficult time establishing what you should pay for a house and to what level it needs to be renovated to.
Build a network.
In order to quickly and efficiently complete renovations, you will need to know people: contractors, real estate agents, potential buyers and tradies. Get out in your community and on social networking sites like LinkedIn, Facebook, and Twitter. Your network should also include a mentor in the renovation for profit arena who can help you avoid bad start-up decisions.
Don’t make it personal.
Don’t expect to renovate each property into your personal dream home. Use the research that you have done and know your target market. A smart renovation will have a finished product that is ideal for its neighborhood, with everything the buyer would expect but nothing to price it outside of your market.
Consider your cash flow.
Renovating for profit can be a big dollar business, but the inflow and outflow will not always line up. Make sure that you have a safety net of savings (factored into your feasibility study of the project from the start) in case you end up holding a property for longer than expected. Consider holding some properties as rentals, rather than selling, in order to have a consistent cash stream and to take advantage of capital growth.
Don’t do it yourself.
In order for renovating for profit to be a business rather than a hobby, you will need to hire professionals. They will be able to work faster and with fewer fixes than any DIY job. Time is of the essence in investment properties. A month without a sale or rent costs you thousands of dollars, so it’s worth paying to have high quality renovations done quickly.
Make sure it’s a deal.
We all have seen listings for houses that are so cheap we wonder how they even stay on the market. Usually, there is a good reason. Before buying blind or assuming that a property is a great deal, look at all the factors that might have brought the sellers to that price. Check out the neighborhood, inspect the condition of the house, and use the network you’ve built to investigate the property’s past. Don’t be the one stuck with a property that everyone else is avoiding unless you know you can make a profit turning it into something new.
Treat it like a business.
Even if you are not able to dedicate yourself full-time to your investment properties, avoid making it too low on your list of priorities. Holding empty properties costs a lot of money, so consider partnering with someone if you do not think you have the time to make sure things move efficiently.
About Jane Eyles-Bennett
Jane Eyles-Bennett is an interior designer specialising in renovating property for profit. With over 500 happy clients to her name and millions of dollars in extra profits generated for them during her career, her business Hotspace Consultants is who smart property investors turn to for guidance when embarking on a renovation.
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