Now more than ever, real estate is big business. One of the most common ways to profit from the market is to buy a home, repair and restore it, and then resell or rent it out for a profit. Buyers have been doing this for years, but the popularity of the practice has grown recently, in part due to the ease of finding homes for sale online.
The classifieds section of any local newspaper is full of ads for homes in need of repair; some homes are in worse shape than others, so their owners want to sell quickly. Property development can be a very profitable business- because the homes are bought so cheaply, investors have more money to spend on repairs. Here, you’ll gain some valuable tips that will help you keep costs low and profits as high as possible.
When you’re searching for an investment property, your first consideration should be the price of the home. Get to know the type of people who are looking for homes in your chosen area, as it will help you develop with a particular type of buyer in mind. A simple online search will yield information on the area’s crime stats, average income and school quality.
Once you’ve found a few properties within your budget, visit each one and walk through it to determine how much restoration it needs and at what cost. You should also check the property values of homes in the surrounding area, as it will give you a rough estimate of a post-restoration selling price.
After you’ve found a home for the right price, budgeted for restoration expenses, and determined an approximate resale value, you can then make a final decision. If you believe that a project will be too time-consuming, pass it by in favor of a different property. The idea behind property development is to turn a profit, and if you’re spending too much time and effort, you’re also spending too much money.
Keep in mind that property development is different from buying and renovating a home that you plan to live in. It’s important not to design the home with your preferences in mind; a fancy bathroom or kitchen with an insinkerator may be your idea of heaven, but they will undeniably eat into your budget and your buyer will be reluctant to pay for something they won’t use much. When developing property, a practical and simple design will be much easier to market. You’ll also need a degree of realism where your renovation skills are concerned; if you can’t handle installing induction hobs, call in a professional builder.
Using the proceeds of your first property sale to buy your next property will only increase your profit margin, as it eliminates the need for a line of credit or a bank loan. Once you’ve sold your first development property, you can continue the cycle by using those profits to continue buying, restoring and selling homes. If done carefully, property development can be a fun and unique way to make a living.
This article was written by Amy Fowler on behalf of Kitchen Appliance Centre, retailers of induction hobs and the insinkerator. To find out more about induction hobs or the insinkerator, please click here.
Photo: Alex Parks