Potential Pitfalls Of Buying A Home To Renovate

If you have come into a lump sum and want to invest it so that it grows, there is little point in depositing it in a savings account. Ever since the financial crisis, the interest rates remain pitifully low. Some people turn to a safe investment such as property. Prices shot through the roof over the last five years, and the experts reckon they will continue to increase until at least 2020.

Sven Gottschling

You can make a profit by turning to property development. Those with a background in building and those who are expert DIY enthusiasts can renovate and sell houses that need improvement.

Unfortunately, you can lose a lot of money if you get it wrong, and your investment turns out to be a money pit. Here is what to look for before you commit to a purchase.

The Location

Just as with any other building, the location is of prime importance. A property in a run-down place will not command the same price as one in an affluent street no matter what improvements you make. Talk to estate agents and seek out up and coming areas where prices will rise. If you find that young couples are snapping up properties, it is an indication that things are set to improve there, and you might be wise to buy now.

Condition Of The Property

Don’t take on more than you can handle. It is easy to underestimate the amount of work a building needs before a potential buyer could get a mortgage for it. Here are some areas of which you must take note.

  • The roof might look sound from the outside, with only a few missing tiles. A detailed inspection could reveal your biggest enemy, dry rot. The roofers in St. Louis see it all the time, and it could cost a fortune to replace all of the timbers up there.
  • The house could be subsiding. If it is an old building, it could have occurred many years ago. Could you tell the difference by looking? Foundation repairs are costly and will eat away at the potential profits when you sell.
  • Can the drains and sewers cope with the demands of a modern home? It could cost you a fortune to replace them. Remember that all of the pipes on the property are your responsibility.

Cost Of Refitting

The building will undoubtedly require a lot of work. To begin with, you must rewire it to make it safe. Then you must budget for a new bathroom and kitchen; both essential if you are to sell the house quickly and for a top price. You must also improve its energy efficiency by adding insulation; concentrate on the loft and cavity walls first. It will need modern double glazed windows too. People expect a home to feature them, they are no longer considered an item of luxury.

It is easy to underestimate the cost of the project and the materials that you need. Working it all out with a pen and paper is difficult; I suggest you learn how to use spreadsheets. They will point out glaring mistakes in your figures that you would otherwise miss.

Even though there are many pitfalls, many people make a good living from fixer-uppers. You can too, if you approach it with the correct attitude.

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