Property Investing in The 21st Century

People usually renovate homes to make them more pleasant to live in. However, did you know that systematic home purchase and renovation are actually very effective ways to make money? Many property investors seek out properties that need improvement. They renovate them, and selling them at great profits. If you do it right, renovating an old home that is in disrepair is very profitable. Yet, you have to do it right–otherwise, you won’t make enough money for it to have been worth the bother.

Good Homes for Renovation

The first step for successful home renovation is picking out the right property to buy.

Green Light Investment:

Look for investment properties that are in need of TLC but in good neighbourhoods. That way, once you renovate the house its price will go up fast.

Red Light Investment:

By contrast, avoid houses in poor neighbourhoods, no matter how low they’re selling for. Usually, in such neighbourhoods, the problem is the neighbourhood itself, not the condition of the house.

Unless you’re a very experienced renovator, or are willing to spend a lot of time learning, look for houses with problems that look bad to most buyers, yet are relatively inexpensive to repair. Such problems include extremely unkempt, untended yards and lawns; damaged paint jobs; broken doors and windows; and old or broken-down garage doors. You can repair these without too many problems.

If you personally know some housing contractors willing to give you a discount (or maybe are thinking about working as a contractor yourself), you can try tackling a house with bigger, costlier problems: non-working bathrooms, a roof that leaks, a kitchen that needs to be completely renovated, or broken electrical circuits. But a lot of consideration needs to be taken into account when dealing with heavy repairs instead of minor ones.

Bad Renovation Property Choices

When buying a home to fix and resell, avoid the ones that have permanent problems that can’t be fixed without dismantling the whole house: termite-ridden wood, asbestos insulation, basements that are prone to flooding, or problems of any kind with the foundation.

Need help learning more about investing in the 21st century? A 21st Century Academy Homestudy course could help you poise yourself for financial growth and security.

Investing In Foreclosed Property

When you look at investing in a property that needs some renovating before it’s rentable or flippable, it’s really important to ascertain the degree of fixing required before buying.

Very often, you can get a great deal on a foreclosure but in many cases the family who previously lived there suffered hardship for some time so things may have been neglected. It’s worthwhile to do a thorough inspection to check to ensure that it’s not just fresh paint and cleaning that the home needs.

Here are some possible repairs that might be needed and these are listed in reverse order of importance/expense/hassle. The first few items on the list really aren’t typically that expensive or costly to deal with. But, as you get down the list, you’ll want to really consider whether or not this investment really is worthwhile. Some of these items, if present, could make the costs and hassles counterproductive for you so you may decide to either: lower your offer or even decline to make an offer on the property. Before making an offer, you also want to be sure you’ll get financing and / or insurance and certain repairs could make this difficult.

1. Cosmetics. Things like wallpapering, painting and basic cosmetics are easy and inexpensive to deal with and don’t impact the home too much.
2. Replacing flooring, fixing walls, replacing tiles and carpeting usually aren’t too expensive to worry about.
3. Electrical and plumbing issues can be a little more expensive. You want to be sure the home is up to code and some upgrades could get a bit costly.
4. Structural. Worries about the roof and the foundation could be a concern and will require careful assessment for safety and expense
5. Serious concerns such as asbestos or getting permission to renovate due to building status in terms of heritage status and zoning are worth getting professional advice about.

A little research into a potential investment property or foreclosed property will go a long way in helping you make wise investments so you can make money on your property investments.

Renovating a Property For Profit

In today’s post we will begin to look at renovating an investment property in order to make a profit, or to get some instant equity in the property. In my eyes, instant equity is profit as well.

Renovating real estate is not for everyone, as it can be a stressful and consuming time for all involved. If you get it wrong, it can also effect your bottom line dramatically. Many people who are new to property investing  may decide to renovate in order to get a foot in the market. Other investors really like the challenge and the work and use renovating as their primary investment vehicle.

Before you purchase a property with the intention of renovating it, you must first decide how much of the work you will be doing, if any. Some choose to complete the entire renovation themselves, some choose to use contractors for everything, and of course there is everything else in between as well. Doing the work yourself will save you money, if you know what you’re doing. It may not save you time though, as specialised contractors can be in and out rather quickly.

Once you have worked out your method of renovation, you must of course work out a properly planned budget for the work to be done. Always use conservative figures, and add an extra 10% for unplanned expenses. Something always seems to come up when you least expect it. If you get your budget wrong, then you will end up making a loss on the project, and we do not want that.

When you are looking for properties that you are considering renovating, it is an absolute must that you get a genuine builders structural inspection completed. It is best that you do not touch any properties that have any structural damage at all. Go for real estate that has cosmetic damage, and can be easily fixed, and fixed for a low price.

When deciding your capital expenditure for the renovation, be careful not to over capitalise, and only allocate the bulk of the finance to certain areas. Areas such as the bathrooms and kitchen should always come first when it comes to renovating. Spending money on things that simply do not need them will greatly effect your profit margins.

Renovating real estate can be a very rewarding investment if that is the path you choose to go down, although in your first project, there will be lots of testing moments and a lot of lessons to be learnt. It is still one of the best ways to quickly add a lot of instant equity to your investment property.