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Five things to consider before buying a house that needs renovation

Five things to consider before buying a house that needs renovation
Like most people, you've probably thought hard about the potential to make money from property.

Whether that's buy-to-let or through buying, adding value and selling on, property is still a great way to generate an income or boost your coffers for retirement.

But this is property we're talking about.

Prices can go down as well as up.

And any kind of investment is not without its risks.

So, careful consideration is needed before embarking on any kind of renovation project with an end goal of adding value.

What to consider before buying a renovation property

Buying a house that needs updating can be a hugely exciting project to take on.

Whether you're looking to make money from bringing a property back to life and selling it on, or are simply keen to put your stamp on a home and add some value at the same time, there's lots to consider.

1. Location is crucial

In order to maximise your return on investment from a doer-upper, it's important to place location at the top of your search criteria.

Think of it like buying the worst house in the best street.

With that mindset, the only way is up as once you have brought your renovation property up to standard, you will benefit from the popularity of the area when you come to sell it on.

2. Look closely at what you're buying. Really closely!

If you can avoid any nasty surprises once you start renovating, you're budget will really thank you for it.

And the best way to do that is to make sure you go through your potential renovation purchase with a fine tooth comb before buying it.

Bring along any experts or contractors you can to check out the property with you on a viewing.

Their knowledge and eye for a problem could be worth its weight in gold and will help you avoid potentially huge expense once your project is under way.

3. Enquire about planning before you buy

Once you have found a potential renovation project, don't go in all guns blazing and make an offer before you have enquired about planning permission.

If you need to extend or build up, you could need planning permission so buying a property without any idea on whether you'll get it is folly.

Selling on a rundown property with no hope of planning permission is not a position you want to be in, so enquire with the local authority or a planning expert before you commit to a project.

4. House renovation costs

Of course, how much a property renovation costs will largely depend on the amount of work required to bring it up to scratch.

But most renovations will see at least some of the following costs:

  *  Planning permission
  *  Extension or loft conversion
  *  Removal of walls / structural work
  *  Roof repairs
  *  Timber treatment
  *  Replacing windows
  *  Boosting insulation
  *  Damp proofing
  *  Electrical work and rewiring
  *  Central heating installation
  *  New kitchen installation
  *  New bathroom installation
  *  Plastering and decorating

The most important thing during any renovation is to keep a close eye on costs and make sure you are as prepared as you can be for any unexpected extras on your budget.

Homes that have been neglected often spring up nasty surprises.

And that's where making sure you use the right contractors is key.

While it can be tempting to undertake certain work yourself in order to save money, sometimes it's a more cost-effective strategy to bring in the professionals.

They will often get certain jobs done quicker and to a higher standard, thus reducing the need for more work in the future.

5. Consider who you'll be selling to

One of the biggest mistakes buyers make with renovation projects driven by desire for profit is developing the property with themselves in mind rather than their potential buyers.

If you purchase a doer-upper in a street that is highly desirable for families, think about where the value is for a family buyer.

That could be in adding a bedroom with en-suite, or a real heart of the home open plan kitchen diner.

Alternatively, if you're looking to sell your renovation project to a young professional couple, don't spend thousands on a high-maintenance garden that will simply be too daunting for them.

Put yourself in your buyer's shoes and develop a property for them rather than yourself.

Of course, if you are renovating a property to live in, absolutely consider yourself!

But it can still be worth thinking ahead to who the property might attract as a buyer in the future - and you should always start any property journey with the end in mind.

Buying a house to renovate and your mortgage

If you're buying a property to renovate and sell-on for (hopefully) a profit, you should consider a 'buy-to-sell' mortgage.

Essentially, these are mortgages without early redemption penalties and mean you can sell your newly-renovated project as soon as it's finished, rather than having to wait until your early repayment fees cease.

As with any home purchase loan, speak to an independent financial advisor before making any big decisions.

If you are looking for a property to renovate, speak to your local Parkers office who can help you in your property search.