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Renovating a property - selling to turn potential profit into cash

Posted on: 03.25.2011 1:52:10 PM Posted by James Lawrence

The purpose of this article is to consider the final and arguably the most important step in your renovation strategy. Selling the property to turn your profit into cash.

Renovation strategies culminate in the property going to sale upon the completion of renovations and yielding a price that not only covers the investor's costs, but exceeds them by a nice tidy amount.

At least, that's the plan. But the best laid schemes of mice and men go often askew....

So try and consider the following tips before you put your latest renovation project up for sale and hope for the best.

Don't cut corners! Never put a property on the market that isn't in a finished state. Potential buyers won't know if you intended to do extra things that you didn't end up doing to the property, but they will not look favorably upon half finished bathroom, unfinished decks and kitchens without appliances.

• Ensure a point of difference - potential buyers may have been around before you transformed the property. Ensure the changes you have made are noticeable value adding benefits before you jack up the price and expect people to suddenly be interested in a property they decided not to buy a few months before.
• Consider what else needs to be done if you have changed the property's use or functionality. Do you need to advertise the sale to a different market? How will you underline its new features?
• Cover costs - even if the market has slumped since you paid for the property pre-enovations, ensure you cover costs when asking for a sales price and consider the need to take away a real estate agent's commission and other sales costs also.
• Consider your new target market. A property that would have originally only appealed to renovators like yourself may now be a great business premises, family home, rental property or holiday home. Determine who your target market is before you begin renovations, and when it comes time to sell, ensure the property still appeals to the market you had in mind

And the most important renovation tip

Don't over-capitalise! The last thing you want to do is spend thousands of dollars making improvements, which either you will not be able to recoup or else make the property lose its market appeal. An example of this might be spending $40,000 on a wonderful in-ground swimming pool, but put it in the front yard. Swimming pools aren't for everyone, especially if all your neighbours and passers by can see you splashing around...

It can sometimes be a difficult decision to make - at what point will the improvements I want to make no longer be profitable. Seasoned investors will learn from their experience, but there is a way you can make a more informed decision on this.

Source: Real Estate Investar
www.realestateinvestar.com.au

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