Refurbishments

Refurbishments

Whether you are managing a buy-to-let portfolio or looking to become a property developer and buy-to-sell, property refurbishment is going to be key to your success. Refurbishing your properties will increase their value, make them more attractive to tenants and decrease what you will have to spend on maintenance.

Refurbishment Costs Vs. Maintenance Costs

When you are managing a property portfolio, there are a lot of costs to consider and it is often tempting to put off expensive refurbishment projects. This, however, can often prove to be a false economy. Holding back on refurbishments often means you will end up spending more, over time.

If one of your properties is in need of regular maintenance work, your monthly out-goings will increase considerably and your budget will be eaten up; not to mention the amount of time you will need to spend travelling to the property or organising repairs.

It is best to address early, getting the refurbishment complete and reducing regular maintenance bills down. Projects require planning well so ultimately you know exactly how to stay within budget and timescales.

Adding Value

Renovating or refurbishing a property is a way to increase its value. According to this article from This Is Money, a loft conversion, costing, on average, between £15,000 and £40,000 will add 10% to the value of the house.

An extra bathroom, costing between £2,500 and £6,000 will add 6.1%. A new kitchen, costing £8,000 on average, will add 5.8%. A new conservatory will add 5%.

And there is more to a property refurbishment than just increasing market value (unless you are working with a buy to sell property strategy) or reducing maintenance bills. A refurbishment can also increase your rental yields and attract a tenant profile more suited to your way of working.

3 Things To Consider

There are three things you should consider when a property you own is ripe for renovation or you are looking for a property to ad value to or flip.

1.          What does your perfect tenant want?

2.          What will add the most value at the least expense?

3.          Choosing a property to renovate

So let’s look at these separately…

1. What Does Your Perfect Tenant Want?

Before you ask yourself this, of course, you first want to decide what your perfect tenant profile might be.

Are you looking for professional tenants, LHA claimants, social tenants, corporate tenants , students, commercial?

Knowing Your Market

Knowing your tenant marketplace should always be the first step to planning your refurbishments. If you achieve the important selling points for your perfect tenant then you will be attracting the right people.

2. What Will Add The Most Value For The Least Expense?

When you are looking at a property for refurbishment look for improvements that can be done quickly, are easy to manage and easy to budget for. Any work should be done with the aims of adding a wow factor, increasing the value of the property, and decreasing your ongoing maintenance costs.

Such works might include:

  1. A new kitchen
  2. A New Bathroom
  3. Increased kerb appeal with a nicer garden
  4. A new boiler and radiators
  5. New electrics and fittings
  6. Splitting a room (to create an additional bedroom)
  7. Installation of double glazing
  8. General decoration
  9. New carpets
  10. Change of use on a commercial property to residential

Larger Refurbishment Projects

For larger refurbishment projects, where you are looking to either add value or change it’s use, the property value can increase by at least two or three pounds for every pound you spend.

Void Periods

Managing your costs correctly should give you a good ROI (return on investment).

Unless the project is a very large one you should plan for all works to be completed within 4-6 weeks, getting cash flowing again.

3. Choosing a Property To Renovate

  • Buy-to sell
  • Buy-to rent
  • Commercial
  • Change of use for commercial property – an increasing market given the impact of COVID-19

Properties With Structural Issues

There are plenty of properties on the market that require small alterations or refurbishment that will add significant value.

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