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Can you still make money out
of doing up old properties?
"Yes," says Author and Professional Property Renovator, Sean Bates, "but most amateur renovators don't" he continues. "There are five key things that most amateur renovators get wrong time after time - but they are avoidable". Sean Bates explains below: 1.) Buying a lemon - otherwise known as buying a property with little or no potential. Houses are like children. They belong to groups or gangs and they suffer from enormous "peer pressure". Some of those children, with help, rise above this pressure and become great leaders. Most however do not realise their potential because of external influence. It’s the same with property. You're looking for a place that can rise above the crowd and reach its full potential. You cannot do this with a little window dressing. You have to find a property that has what it takes and is not been pulled back by its peers (i.e. negatively influenced by its location and / or adjoining properties). 2.) Misunderstanding the local property market and adding the wrong renovations. Knowing your local property market is crucial to deciding which renovations to make. Hence one of the best ways to start renovating property is with your own home - because the market for your property will be people like yourself! Using two local estate agents I recently checked my selling strategy on my own home just as I was about to begin planning the renovation. I talked to each agent for over two hours about the local property market, how it was developing, how the financial sector was doing, how Vodaphone, Worldcom and Othercom are affecting our local economy and therefore potential buyers of my - soon to be - renovated property. We talked about buyer preferences, kerb appeal and property features. The result was a new 1,100 sq ft addition costing me £40,000 and making me £100,000. The potential profit (£60,000) is high because the potential buyers are demanding the kinds of changes that are being made! Also, it’s a great location, pretty good plot and the market for this type of property is strengthening. This opportunity came about from the effort to understanding what people want from property and using the knowledge of local property professionals to translate that into renovation plans! 3.) Under investment and failure of the property to reach its potential. Knowing how much to invest requires an understanding of your potential buyers and a knowledge of building technology. I recently visited a 2 bedroom bungalow in a good plot and location that had just been renovated. The bungalow was screaming out for additional floor area and certainly an additional bathroom and bedroom. However, it only got a badly fitted kitchen and bathroom upgrade, lots of bright colours and a hefty price tag. Guess what? It's still up for sale 9 months later. In this case, the property needed a far greater investment to generate a maximum return. 4.) Losing control of costs and time management! Losing control of costs means that you lose control of your profit. It’s remarkably easy to do and particularly when your workload is heavy. I always recommend "Manage your project first" and "do your DIY second!". I know somebody who forgot to manage the project with a cottage refurbishment in Wales and ended up not knowing where he was within a profit range of zero to £50,000. The most likely overspend is from missing items out of the original estimate than it is for estimating costs wrong. I once replaced a heating system as part of a house renovation. I missed out plumbing joints, elbows and tees from my cost estimates and it cost me the best part of £500 for what seemed trivial items. Consider that five similar mistakes would cost £2500! In case you thought it couldn't happen to you, think about the top five "forgot to include" items in cost assessments:
And of course there’s the "I don't know where the day went dilemma". How about..
The solution to all of these of course is good planning. Renovation Secrets is essentially a project managers guide to managing around these traps. It contains lots of checklists that will help you be organised ahead of time. 5.) A botched DIY job. With experience you can spot good work, average work and a botched job, a mile away. Renovation Secrets puts a lot of emphasis on training yourself to recognise the difference. There are some typical DIY clangers that will catch the eye of even the least aware buyers and stop them dead in their tracks. The worst DIY jobs are the structural ones. There are many examples of DIYers who have removed load bearing walls and built a loft conversion on top of a ceiling platform. The result of course is a very elastic floor and a serious safety problem! Cosmetic defects are more common than structural ones. Here are a few common fit falls to avoid:
The key message is that a botched job can really damage a property’s value so don't go beyond your capabilities and get skilled help when you need it. Remember, 80% of renovators will fall for one or more of these mistakes on every project! If you can avoid these pitfalls, then the chances are that you'll be laughing all the way to the bank. More information available
from:
============================= Please call Neil Lewis, Publisher, on 07803 503 558 for more help.
============================= Both the downloadable and hardcopy versions include free property investor newsletters and access to the private Property Secrets website and renovation forums. Renovation Secrets is written by Sean Bates, a Professional Property Renovator and building engineer. Please contact Neil@PropertySecrets.net if you would like a review copy. |