It is a fact that the property market can be an exceptionally lucrative way to make money. By purchasing a home that needs renovation works, carrying out this work and then reselling, it can be possible to recoup your investment costs and be left with a considerable profit. The 2022 forecast for housing prices suggests an increase of 6.6% which can be a significant return on a newly renovated home that was bought at a reasonable price. If you are planning to buy a home, improve it and then resell it for profit there are some key factors to consider first. In this article three of the top tips to help ensure you turn a profit on your property acquisition are discussed in detail.
Auction or private seller
The first consideration you should think about is whether to buy the home from an auction or from a private seller. In the case of buying a home to resell after renovation, an auction tends to be a far better option. There are numerous reasons for this. Firstly, you can’t be gazumped as there is no property chain involved in the sale. Secondly, auctions are a suitable place to pick up cheaper homes that need moderate to major renovations and are therefore less likely to be sold privately or by estate agents. These are the type of properties that can turn the biggest profit margins for investors looking to buy, renovate then resell. Some properties may have been repossessed because of bankruptcy and the finance companies who have put the property up for auction will want the property to sell quickly. Whilst auctions tend to be the best bet for buy to resale properties it is also worth looking at the private seller market just in case there are any bargains to be found.
Ensure you have the finance to complete
Wherever you find your property for renovation and resale it is of paramount importance to ensure that you have the funds to purchase the home outright and undertake all renovation work before resale. Running out of money can spell disaster for investments such as this as you may be left with an unfinished home that will struggle to sell and may need to be reauctioned. The key point is to budget effectively and ensure you have sufficient capital to complete all renovations. It is worth adding 20% to your projected total costs to cover any unforeseen issues such as increased building costs or delays. Finance companies such as Sachem Lending offer flip loans that are designed for buying properties to resell after renovation. This can be an ideal way to raise the capital needed to purchase and renovate your investment.
Who will renovate the property?
If you have experience in building homes and are adept at renovating properties, then it makes perfect sense to undertake the improvement work yourself. This can save immense amounts of money and it is no surprise that many people in the building trade move into the buy, upgrade and resell market. Clearly you must be experienced in building work and be able to renovate in line with expected standards of construction work to adhere to relevant building codes and standards. If you have no expertise in this field, then it is imperative to get a wide range of quotes from experienced builders and choose a firm with experience and good customer feedback.
