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:
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:
