Renovating properties is a very popular strategy for making extra money when property investing. Many investors will renovate and rent for a higher rent which is a good way to increase capital growth and also receive that higher rent, but also some property investors like to renovate and flip the house as soon as it is finished.
Location, Location, Location
We have all heard that cry, “location, location, location” and it is one that will go on forever because there is no denying that location plays a huge role in making money in real estate.
The purpose of renovating is not just to make a property ‘look pretty’ but to make money after it is completed.
Renting a renovated property
When renovating to rent the property may just be given a face-lift or it may have rooms added. Either way the rent will increase, just be differing amounts. So when choosing a property for this purpose care needs to be taken that it is in the right area – an area where there is strong rental demand. This could be near a university, near a train line to a large city, in an area where there is increasing construction and industrialization.
Renovating to sell
When renovating to sell a property usually has a fairly large makeover and in this case the renovator is looking for a larger return on his investment – probably in the vicinity of 5 – 10% in approximately 4 months or less. In this case the property needs to be in an area of good sales and high demand for selling so that a quick sale can be achieved.
You can see that the two different strategies will most likely need a different location and different approach and these considerations should be at the forefront of your criteria when planning to renovate a property.