If you want to buy real estate to make a profit and make a profit, you have your job to do. Renovation is a mammoth task and requires careful planning and a strong team of professionals on the job. But before you even think about the renovation project, you need to find the right home.
While there are always plenty of dilapidated homes on the market, there are many things to consider before choosing the right home. From the location and price to the condition of the home itself, you want to make sure you make a fully informed decision that will make this venture worthwhile.
To help you make the right choice and increase your chances of a successful renovation, we’ve put together this guide to choosing the right home. This way you can be sure that you’ve dotted all your I’s and crossed all your T’s, and get yourself ready to make the biggest profit possible.
Choose the worst house on the best street
One of the most important things to consider when buying a home is location. While you may be able to buy something cheaper in a less desirable area, that could also affect your ability to sell for a significant profit or find a suitable tenant.
By buying a home with good amenities nearby, such as schools, parks, shops and public transport, you increase your chances of a successful investment. You want to make sure that the elements you have no control over don’t negatively impact the track and waste all your hard work.
Buying the worst house on the best street is likely to get you a good deal for the area. In addition, the house will already be salable and immediately attractive to buyers or tenants. For help finding the right neighborhood, look at real estate offers to find areas with high auction success and a competitive rental market.
Prepare your finances
Buying a property to flip requires some financial commitment as you will need enough money to cover both the purchase price and renovation costs. The time it takes to make some money back will depend on the size of the renovations and whether you’re planning to sell or lease, but either way, you’ll be out of pocket for a while.
One of the first things you should do is discuss your options with a financial advisor. If you already own a home, you might be able to using equity to buy this additional home. If not, make sure you have enough money in the bank to make a down payment, pay off your home loan, and finance the renovation.
Make sure the property has good bones
Buying a home with good structural integrity makes for a smoother renovation process and could potentially save you tens of thousands of dollars. Homes with a solid foundation, a good layout and an open floor plan are cheaper and faster to renovate, giving you a better chance of making a healthy profit and staying within budget.
A reliable electrical and plumbing system is also important, as these can be extremely expensive and time-consuming to repair or replace. Your goal is to spend as little as possible, so it’s critical to find properties that only need superficial upgrades rather than being completely gutted.
Work with a trusted real estate inspector
If you think you’ve found the perfect home, don’t get too carried away and make hasty decisions. Just as if you were buying a home yourself, always have a home inspection performed before signing on the dotted line.
A house may look great on the outside, but you never know the true condition of a property until you have it assessed by a building inspector. They can tell you about any problem areas that could push up your renovation budget and put the entire project at risk.
Issues such as termites, roof damage, plumbing and electrical failures, and water damage are just some of the issues commonly encountered by property inspectors. Ensure you are working with a professional who provides comprehensive inspections and a fast turnaround.
Be aware of the municipal ordinances
Even if you haven’t found the right piece of real estate yet, you have an idea of what you want the end product to look like. Unfortunately, there are many rules and regulations to follow when renovating or building a home, and it all depends on local laws.
So before you choose a property, make sure you are familiar with the municipality and how it works. While you generally don’t need approval for internal renovations such as new cabinetry or floors, you do need approval for structural changes such as extensions and additions to the second floor.
Many municipalities have different regulations governing the size and height of these renovations and the additions of decks, fences, carports and sheds. Visit the council’s website or contact us directly for more information and to understand the type of regulations you may be dealing with.
Stick to your budget
Your budget exists for a reason and you run a big risk by going over it. You must remember that you are doing this to make a profit, and if you spend too much you may struggle to barely break even.
Your budget should be one of the first things you decide on before embarking on this journey as it will dictate many of the decisions you make. This ensures that you are in a good position to achieve your goals and make a successful investment.
Finding the right piece of real estate to renovate for a profit is a complicated process and it is not something to be done in a rush. While there are always risks associated with real estate investments, following the tips outlined in this article will help you make the best informed decision possible and achieve great success in the real estate market.