Doing up a home in disrepair can prove profitable, if you set clear limits on what you're hoping to acheive. Photo/123RF.
Doing up a home in disrepair can prove profitable, if you set clear limits on what you're hoping to acheive. Photo/123RF.
Buying up a rundown property may seem like the perfect opportunity to secure a home at a lower price, and the potential sell it on again at a profit.
But there are some key steps that buyers need to follow if they are to make such a project a successfor there are many potential pitfalls along the way.
The Daily Mail, with some help from the UK's industry body for real estate agents NAEA Propertymark, recently revealed five ways to ensure your DIY property dreams prove to be a worthwhile decision.
They include how to choose the best location and what you need to consider when drawing up a budget.
Mark Hayward, chief executive of NAEA Propertymark, said: "Buying a fixer-upper can be attractive, but is a decision not to be taken lightly.
"To ensure the process remains as smooth as possible, buyers should consider important points such as the length of time they can commit to and how much they're willing to spend."
His views were supported by financial experts, with Jonathan Harris, director of mortgage broker Anderson Harris, saying: "Homes in need of renovation or refurbishment where a buyer can really make their mark and add some value, are always popular. But it's important to appreciate your limitations, both in terms of time and budget.
"Don't overstretch yourself, taking on too big a project which you would then struggle to fit in around your day job. And ensure your budget is realistic - many people end up significantly overspending, wiping out any potential 'profit'. It is worth seeking professional advice in order to avoid making a costly mistake."
The old adage that you need to 'buy the worst house on the best street' shouldn't be forgotten if you're looking to make money in property, according to the NAEA Propertymark's Hayward.
This is because location is key to making sure your property will sell in the future. You can have the best-presented house in the street but if it isn't in the right location - such as in the right school catchment area or within commuting distance to a nearby town - it will limit the number of people who consider it to be a good potential purchase.
Renovation versus cosmetic improvements
Minor cosmetic improvements such as painting, replacing windows and refreshing the kitchen may be all that is required if your budget and time is limited.
Small steps like adding a fresh lick of paint can help. Photo/123RF.
"Ultimately, it will depend on your situation. If you're hoping to complete the work as soon as you can, you might not want to tackle a home requiring major renovation to make it livable," explained Hayward.
Be clear on budget
Before making a purchase, a thorough budget needs to be drawn up to ensure there are sufficient funds available to carry out the required improvements.
This will mean finding contractors who can join you at a viewing, so that they can provide a quote. And don't forget to work out what supplies are required and how much they will cost.
But perhaps the biggest potential pitfall is forgetting to add a contingency fund into the budget.
Hayward said: "Always remember to add on a buffer to the total amount in case any unexpected costs pop up."
Get a full builder's report
Some homebuyers believe that a mortgage lender's valuation report is a comprehensive builder's report.
However, if you're purchasing a fixer-upper, you'll need to employ an independent provider to act completely on your behalf and give you impartial advice on the property, suggests NAEA Propertymark.
Although you can save money buyer a doer-upper, issues can pop up along the way that can push a project's timeline back. This can end up costing more money than anticipated.
Even a simple clean can make a difference to a house. Photo/123RF.
Hayward explained: "Consider the pros and cons of the purchase beforehand and if you go ahead, remain committed throughout, as it might be hard work but it'll be worth it at the end."
