Renovating for profit is a huge commitment for investors and can often be risky if you are not prepared. Take a look at what mistakes to avoid.
Renovating for profit is a huge commitment for investors and can often be risky if you are not prepared.
Listed below are the biggest mistakes people make and there are also some tips to help you avoid them.
1. Lack of Research
When it comes to the property market, research is key. You are investing a large amount of money into a property, so decisions need to be made rationally and intelligently. It is important to educate yourself about renovations and selling for profit by reading books, researching online and speaking to professionals in the industry.
2. Not Thinking of Your Audience
When renovating for profit you need to think about your audience. You are not going to be living in this house, other people will be. What might appeal to you, may not appeal to other people. Once again, you will need to do your research. You may think you understand your target market, but you could be completely off track. Owners need to think about what type of people would be interested in this house – couples, families, singles, and students. Neutral colours are always a safe bet, however if you do have a specific type of group in mind, make sure the theme is evident throughout the house. It may not be a bad idea to consult a professional designer.
3. Do it Yourself
Although you may think it will be a fun project to renovate the house yourself, it could lead to a world of pain. Firstly, this property will be used by tenants, so it will need to be safe. You cannot afford to risk the house falling apart after the tenants have moved in. Secondly, professionals will most likely be able to stick closely to a budget as they can work faster and know what they are doing.
Another mistake people make is hiring dodgy tradespeople. It is important to hire professional tradespeople that are licensed so that if there are any problems down the track, you will be covered.
4. Lack of Effective Budgeting and Planning
There are plenty of problems that can occur from a lack of effective budgeting and planning. The first mistake to avoid is paying too much for the property. This can often happen at an auction as bidders can become emotionally involved and bid over the property value. If you overpay for a property, it could affect the amount of profit you will receive when you re-sell.
The second mistake is not planning out the renovation in detail. In order to stick to a budget and a specific completion date, you will need to map out what needs to be done and the costs involved. If you are hiring a professional, make sure they know exactly what you want before they start to avoid problems down the track.
5. Not Knowing Rules & Regulations
You could face a lot of trouble if you do not comply with the rules and regulations of the local council. When it comes to renovations, it is better to be safe than sorry as the council is able to stop you from renovating if it is not within their regulations. For example, you may want to cut down a large tree in the front yard and do it without telling the council. However, this tree may have been native and could result in a lot of trouble for you.