A full property renovation is not for the fainthearted, but it can be a great way to get started in the real estate market. By purchasing run down homes and doing renovations you stand to make a profit when you sell. However, much depends on the cost of the renovation and part of this is likely to be equipment hire.
A handyman is unlikely to have all the equipment needed to renovate a home from the foundations or floor up. They may need to hire such things as scaffold or professional tools to complete the task. Plant hire could also be on their list, depending on what needs to be done. Excavators can make any job go a lot faster, especially when you need to excavate ground to fix foundations or add new ones.
It is wise to make out a list of everything that needs doing to a home or building before you even purchase the property, because if the repairs are too extensive you may make a loss rather than a profit. Or you may make a smaller profit than you wanted. Don’t forget you should also count in the hours you are likely to spend working on it with the other costs. You don’t want to be working for next to nothing.
Once you know what needs doing, you can divide it up into things you can do yourself, and things you don’t have the skills to tackle. You then work out the costs of hiring others to do those jobs. You’ll need to know what similar homes in the area are worth – not similar ones that are run down, but those that are in good repair as yours will be when it is fixed.
It is a simple matter then to subtract the costs of the property + renovations from the likely new selling price. You also have to add in the additional costs of buying and selling. Things like the real estate fees, stamp duty, solicitors fees and so on all have to be taken into account. Make sure you don’t get emotionally attached to the home or the idea of doing it up before working out the balance sheet for it. There is no point going ahead if you are not highly likely to make a good profit.
However, you can also spend a bit of time working out how to cut costs, so long as that doesn’t mean cutting back on things that really need doing, or compromising the safety of yourself or anyone else.
Cutting costs can be done by using cheaper finishing materials that are just as strong and good as the more expensive ones. For instance, fancy, gold-plated taps are much more expensive than chrome or stainless steel. Once you’ve done your sums and come up with a profit, you can go ahead with a clear mind.
