Buying fixer-uppers: everything you need to know
As a property investor, there are several different investment strategies you can adopt to make money out of your Perth properties. Whilst many property investors aim to generate a rental income from their investments, others choose to buy a fixer-upper that they then renovate to sell. Whether youre renovating your Perth rental before selling or buying a fixer-upper for the immediate profit, there are a few things you may want to consider before diving into your new investment.
Why renovate to sell?
Renovating to sell can be an attractive strategy for property investors looking to get immediate bang for their buck. These fixer uppers, or ugly ducklings as some may call them, often sit below market price, and can offer a significant profit margin for savvy investors with an eye for detail and a smart renovation strategy. However, whether youre buying a fixer-upper or fixing up your own Perth property before selling, there are a few dos and donts youll need to consider if you plan to make a profit from your project, not a loss.
- Assessing renovation costs – When renovating to sell, bear in mind that not all fixer- uppers will be a quick fix. Before investing, consider how much it will actually cost to fix the flaws. The biggest mistake you can make is overcapitalising on renovations and making an overall loss on the sale of your Perth investment property. Before investing, find out whether the real estate contracts include an inspection clause. Carrying out a professional inspection before buying can help you identify any red flags such as structural problems, giving you more room to negotiate with the seller. If youre facing serious structural issues, you may want to reconsider your investment altogether. These hidden issues can be costly to fix and may not be worth your time and money.
- Research, research, research – We say it a lot, but any successful investment strategy requires thorough research of the local property market. Before buying or renovating your Perth property, you need to have a rough idea of its prospective value after renovation. After all, this will determine how much profit you make from the sale. You can gain an estimate of the propertys potential value by researching similar Perth rentals in the local neighbourhood.
- Make the smart buy – When it comes to buying fixer-uppers, its important to do the math before you make the purchase. Once youve got an idea of your renovation costs and the estimated value of the property after renovation, its time to work out how much you can afford to spend on a property in the first place. By subtracting your costs from the estimated market value of the property (leaving room for unexpected problems), you can work out your potential profit margin and gain a better idea of how much you can afford to offer in the first place.
Advice from the property management experts
Whether youre renovating your Perth rental property or deciding on the best investment strategy for you, the team of property professionals at Rentwest can offer you the advice and expertise you need to form a smarter strategy. Our team of expert property managers have an in-depth knowledge of the Perth property market, and can help you make the best decisions for you and your property investment.
For more advice on how to make the most out of your Perth properties, contact the Rentwest team on 9314 9888 or email us at firstname.lastname@example.org