What Should be on your Renovation Radar?
Looking for that renovator's dream to turn into profit? You might have to fine tune your renovation radar.
Renovators – especially those new to the game – should beware! Don’t be fooled into thinking that to get rich you can revamp just about any old property.
Successful renovators understand that not all dwellings are a viable candidate for renovation; only some can reasonably be expected to turn a profit once fixed up.
You need to take some time to familiarise yourself with the qualities that make up what the real estate agents label a ‘renovator’s dream’. Failure to do so could turn the process into a renovator’s nightmare rather than a profitable project!
Weeding out the good from the bad will come down to more than just assessing the property’s condition. That’s only one step in the process – and it’s not the first one.
In fact, it’s just as much what you do before the physical renovation that will determine whether you turn a profit. That prep work includes researching the location, demand for and then the condition of a potential renovation target.
Choose your Target
Once you have pinpointed the areas you want to invest in, spend between 12 and 16 weeks attending open houses to get a clear idea both of what renovated and unrenovated properties are worth in the area. This should help you decide whether you will be able to purchase and turn a profit in a given location.
You will also need to research the local culture and demographics of the area so you can be sure to renovate in line with the suburb’s overall ‘vibe’. For example, a cottage style won’t suit an ultra-modern suburb and vice versa.
You’ll also want to include features in your property which suit the local demographic. For example, if it’s a family area, you’ll want to include a bath in the bathroom.
Your research may take a few months to complete, but it’s much better to spend time getting to know your market than to risk renovating a property for no profit at all.
The best suburbs to focus on will be the ones in which property values range from high to low because, as a renovator, you will need to buy low and sell high to realise a property’s full potential.
Suburbs where the land has been built out and the only option is to renovate will offer the most scope for renovation work. You should keep your eyes peeled for properties within close proximity to public transport, infrastructure, shops and schools as these are generally features that most buyers seek.
These are all qualities to look for; but there are also locations that for a renovator are definitely a ‘no no’.
You should avoid suburbs where new housing or new estates have been established since a brand new house will always outperform a renovation.
Steer clear, also, of suburbs where there is a significant amount of land available as a new house could be built there for less than it would cost to renovate an existing property.
How to Unearth a Diamond in the Rough
The more boxes you can tick for a property, the better your chances of making a profit from a renovation.
Some qualities your renovation checklist should include are:
- Desirable, well-serviced location
- Good floor-plan and a layout that can be easily adapted
- Structural soundness and in good condition – helps you avoid extra expenses and headaches!
- Room to extend – the addition of extra rooms can add significant value to a property
- High demand – you want to renovate a property where there are plenty of buyers
- Sufficient scope of work – there needs to be enough renovation opportunity to increase value
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