How to Profit from a Fixer-Upper: Things to Consider
More and more of us are looking for ways to better balance our lives. Working at the office all day limits our time with our families. That’s why lots of us seek out opportunities to work for ourselves. This provides more flexibility and may even offer you the chance to do something that you love. Best of all, it may increase your earnings significantly. One way to earn a living for yourself is to become a landlord. But as property prices start to climb, it can be tricky to make the profit you’re looking for; unless you know exactly how to profit from a fixer-upper.
Perhaps one of the most lucrative ways to profit from the property market is to buy a fixer-upper. Any property that is in need of modernization and a little TLC is going to be put on the market at a lower price than others. However, taking one on can be a bit of a gamble. It’s important to thoroughly inspect any property that is showing signs of neglect or wear and tear.
Another essential thing to consider is the cost of getting it back up to standard. Labor will always be the biggest cost factor. If you can take on the bulk of the work yourself, you can save a fortune. This will boost your profits if you choose to sell it on. If you’re doing it up to rent it out, you can demand a higher rent for a property finished to a high standard. So if you can do this work yourself, you will see a higher return on your investment.
Good quality finishes work well in a neighborhood that expects them. Be sure you are in the right location to attract tenants who want a higher standard. Start by addressing the heating and cooling systems. These may need to be ripped out and replaced with modern facilities. Choose systems with attractive finishes and user interface. You can look for stylish radiators and something like the stelpro thermostat to appeal to your clientele.
You may also need to modernize the electrics and plumbing. All of this kind of work can be quite messy. It may also need to be completed and certified by a registered specialist. Ask for three or four quotes so you can be sure of a fair price for the work. This will also help you establish a good budget for your renovation project. Once the work is over and the modern facilities installed, it’s time to address the decor.
Kitchens and bathrooms should be kept simple, stylish and clean. Choose good quality flooring that looks fresh. Wall colors are often neutral in these spaces, but a more vibrant accent wall could create the style your clientele may be attracted to. Tiling and grouting can take a long time, so start in these rooms first.
Flooring throughout the property may be in one style. Or you may choose to separate different areas with a change in flooring. If you’re choosing hardwood or tile throughout, be sure to add a rug or two in the living room and bedrooms to make it feel more homely. Drapes or window dressings should also be supplied for privacy and styling.
Walls should have a fresh finish. You may need to have the skimmed if the house has had a lot of work or is quite old. It’s best to wait a week for the plaster to settle and dry before painting. Choose neutral colors throughout, but don’t be afraid to add a stylish accent color to each room. This makes the property appear more homely and attractive to the type of people that could be living here.
Even if you’re not letting the property as a furnished house, it can be a good idea to dress it for viewings. Place a dining table and chairs complete with runner and place settings in the appropriate place. Arrange some seating and a coffee table in the living room. A bed or two can also help potential tenants or buyers see how they could live in your house. Stylish finishes could also help you drive up the rent or value of your house to increase your income.
If you do decide to sell, you will need to check your asking price covers the healthy profit you’re looking for. There will be legal costs and agent costs to consider. Add those to the cost of purchase and the cost of renovations. You can then choose to place a value on your time, or a markup for your profit requirements. This should give you the asking price you’re looking for. If it feels too high for the current market, you could choose to wait. However, time is money in the property game! You may need to rent it out to cover the cost of your mortgage.
Doing up an old house is a lovely project to take on, especially if you enjoy DIY. Some people fall in love with the property they’ve renovated and choose to move in! Of course, the point of buying is to increase the value of the property for a profit. And if you add up all the income you could earn plus the new value of the property itself, you may have just doubled what you invested!
If you find you need builders and contractors to take care of a lot of the work, you may find you’re not able to reap quite as big a profit as you had hoped. And there is also the danger that you will end up with a loss. Don’t be disheartened. Although it may take several years, property prices tend to get higher over time. Choose a good rated mortgage to avoid negative equity if you need to sell within a specific time frame.
Rental income can often cover the cost of your mortgage repayments and offer you a little more too. But keeping a tenant happy can be tricky at times. You need the property occupied and the tenant paying on time to be sure of a reliable income. Choose your tenant carefully and take a deposit in case of damage. Enjoy the project, and hopefully this article helped you learn how to profit from a fixer-upper!