If you are keen to take a foray into the world of property developing after watching an array of programmes on your TV that make such an activity look easy, you need to make sure that you don’t simply head to a property auction on a whim. It’s vital that you do your research and investigate the sorts of areas, properties, and prices in your locality. Homes Under The Hammer is great entertainment, but it makes doing up a house and selling it on at a lucrative profit look like child’s play when things are a little more complex behind the scenes. There is money to be had in bricks and mortar, but you must do your homework.
The property market in recent months has stagnated, and with Brexit on the horizon and the uncertainty that surrounds it, shifting a newly renovated pad for the money you want will get more difficult in 2019. However, if you still want to take the plunge and invest some of your hard earned cash into the property sphere, take a look at these five pitfalls to avoid.
Don’t Buy At The Wrong Price
It seems like common sense, but many first time property developers purchase fixer uppers for too much money. They may be at an auction as the red mist descends and they need to own the property that’s available come what may. Or they may be in a bidding war with another developer and their pride gets the better of them. You must have a ceiling price in mind and stick to it. Research your local area and see what properties are fetching in your area. Try and work out how much it would cost to renovate a property, consider how much profit you want to make after tax and put your offer in accordingly. If you are putting in all of this work simply to break even, there really isn’t much point.
Remember, this jaunt into the world of property is to make money as a side hustle. You will still have your full time job, kids to look after and a home to maintain. Don’t allow budget concerns to add stress to your already busy life.
Don’t Buy In The Wrong Place
An area might sound desirable if it’s up and coming, but don’t take the estate agent’s word for it. If property isn’t shifting there, the house prices have gone down in recent years, and the estate agent tells you to keep an open mind on a viewing, the chances are that this area has been up and coming for decades and probably will remain so for years to come. You need to be careful with property euphemisms. Bijou can mean poky, a blank canvas can mean no walls, and ripe for development can mean structurally unsound.
Ensure that you visit the areas that you are looking to buy in. If you don’t feel safe at night wandering the streets, the chances are that your potential buyers won’t either. A much safer bet is to buy in an already established area and hunt for the worst house on the best street. A house can always be renovated, but a location often cannot be.
Only Do What Is Necessary
You need to remember that you have purchased your fixer-upper to make money. There’s no point looking at the heating system and converting to gas central if this won’t increase the resale price you can achieve. Sometimes, a simpler (and more cost effective) approach can be taken. By replacing oil storage tanks and servicing a boiler, your oil fired heating can be in better condition than any gas fired central heating system.
If the bathroom has seen better days, by all means, put in a new white suite with rain head shower in an attempt to seduce potential buyers with a lifestyle, but don’t go overboard. Ornate fixtures such as taps, colourful mosaic tiles, and granite flooring can be too personal and niche. Keep it simple and relatively bland to allow the people viewing your home scope to put their own stamp on the place. There’s nothing better than freshly skimmed walls, a magnolia hue, and a high quality finish to attract buyers.
You can add touches of personalisation in the dressing of the finished pad. Get a top notch sofa, some pots and pans, and a decent dining table and dress the place ready to sell.
Don’t Do It All Yourself
While you want to cut costs by attempting some of the work yourself, don’t be tempted to cut corners. If you are working with gas, you will need someone Corgi registered legally. If you are looking into rewiring the property, secure the services of a qualified electrician. And if you’ve never plastered a wall before, don’t think that it’s as easy as it looks. You could end up with a dodgy finish and an uneven surface. Pay for decent tradespeople as they will do a better job and in a speedier time, allowing you to market the property more quickly.
By all means, grab a paintbrush, fix the leaky taps, sort out the garden and wallpaper a room, but leave the jobs that you can’t do to people who know what they are doing.
Don’t Ask For Too Much Money
Just because you have gone over budget doesn’t mean that you can simply increase the list price of your newly renovated dwelling. A home is only worth what someone is willing to pay for it and put it up for too much money, and you won’t even get buyers through the door. Instead, stick to your budget and ensure that you factor in a contingency of ten percent for any unforeseen issues. Take a look at the ceiling price for the road and objectively decide if yours is on a par. If it is, you have your guide price. Be sensible otherwise you could end up stuck with a pad that you need to shift.
Property development should be exhilarating as much as it is daunting. Follow this guide, avoid the pitfalls and enjoy making a lucrative profit to top up your savings.