What property is worth renovating?
You've heard that investing in property is one of the best ways to build a reliable income - there's nothing as safe as bricks and mortar. But buying a house is one of the biggest investments you will ever make – whether it is a home for yourself or as an investment opportunity.
Always go and look at a property before you buy it. It sounds like common sense, but many houses seem like a good buy – especially if you are bidding at an auction – even when they aren't. You need to be very careful - if something is going cheap then there is usually a reason for it, and photographs do not always tell the whole story. Make sure you have a good look around both inside and out; knock on walls, go in the loft, look at the roof, check for signs of damp or exposed electrical wiring. If you have any doubts, then this may not be the ideal property.
The biggest mistake people make is thinking that you can get away with repainting walls and changing carpets – in some houses, this will make a world of difference. A dark dingy house suddenly looks like an amazing family home - but more often than not there are greater issues that need dealing with under the surface.
For example, if there is a problem with the roof, it can turn out to be a very expensive job. Windows and doors may need replacing even if they are double glazed. Cracks in walls can often be hidden by wallpaper so look for structural movement outside and repointing issues. I always advise that you take out a full structural survey, and if you are at all unsure have a gas safety engineer and an electrician give the place a once-over.
These things can seem like an uneccesary expense, but if you look at the big picture, you will see you are better off wasting a couple of hundred dollars and pulling out of purchasing a property rather than spending thousands later. When you buy a property and just change the surface appearance, you might find out you can't sell it on later – just because you don’t want to go to the expense of spending money on a structural survey, it doesn’t mean your buyer won’t!
You will need to add up all of the costs of repair, the purchase price, legal fees and other costs incurred in the buying process. If the selling price allows a healthy profit then go for it – but bear in mind that things can cost more than people budget for, and it's always best to have an extra emergency 10% on top of your expected budget.