I was asked yet again how to find properties where you can add value but are not going to trap you into spending a lot of money.
Find that diamond in the rough
Yesterday yet again I was asked how to find properties where you can add value but are not going to trap you into spending a lot of money.
Let’s take the example of looking for renovation candidates where you can add value.
Start by looking for properties that obviously need some TLC; the classic “renovator’s delight”. If you can see past the bright orange 1970s kitchen, the wall-to-wall shag pile carpet and the mouldy bathroom with lime green bath and envisage that sparkling “after” picture, renovating may be for you.
Glossy real estate brochures are littered with shiny trophy properties, so you’ll need to do a bit of extra legwork to seek out the rough diamonds. Visit real estate agents and ask to see properties that need work or that they are having trouble selling.
An overgrown front garden, the fence falling down and paint peeling off the front door is a great start. First impressions are key, and just fixing up these simple, fairly inexpensive things makes an immense impact before your potential buyer even steps in the door.
Avoid properties with massive structural issues that will quickly turn into a money pit. A building report from a qualified builder before you buy is money well spent. You are renovating to make money, so steer clear of expensive fixes that will return little value to your bottom line and eat into your profits.
If a purchaser can’t “see” it, you lose the “wow” impact. A property might need to be restumped, rewired and replumbed, but no one is going to walk in and say “I love the rewiring!” You want to add as much perceived value as possible, as economically as possible.
So where do you get the biggest bang for your renovation buck? Anything creating that first impression. We’ve mentioned gardens and fences. Potted plants at the front door add colour and you can take them with you to your next renovation. Little things, like replacing old doors and door knobs, updating tap ware and replacing old light switches and power points are very cost effective ways to refresh a room. Additional internet and TV points added to bedrooms are always appreciated. Repainting can instantly transform a house, as does polishing the floorboards or laying new carpet.
Visit display homes to get ideas and see the latest trends and colours, but always keep the period of the home you are renovating in mind.
Wendy Moore was one of Australia’s leading IT project managers when she realised she was more passionate about property than project management. She left her highly paid position to become a full time property investor. She founded Affluencia to teach other women how to enjoy success in property investing.
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Brian James writes: Gem of a blog Wendy. Well done and thanks.