Essential Things to Know Before Investing in Your First Renovation House

Investing in a house you plan to renovate can be highly lucrative if done correctly. It can also be costly if you don’t have all your facts and plans firmly in place before you start. Understanding how the property market works and what renovations will add value to your investment are essential before you begin your search for the investment property.

Buying in the U.S. residential property market makes sense because the buy-in costs are lower than purchasing Australian or New Zealand residences. However, buying as an overseas investor adds another element to understand.

A renovated residential property can increase in value by up to a few hundred thousand dollars, depending on the initial investment costs. Most renovated properties can sell for at least $100,000 above the initial price. If you keep your renovation costs to a strict budget, you can expect to recoup $40,000 to $60,000 in profit.

Area Is Important
Purchasing the right renovation property is essential, and one of the critical selection criteria for your investment project should be area. Location is always important when buying real estate, but your selected place will directly impact your profits.

Some of the critical things to consider when thinking about which area to buy a renovation property in include:
• Worst property in a good street,
• Growth areas and popular suburbs,
• Economic stability and growth in the region and the
• Location of the house itself.
Let’s look at each of these factors briefly.

Choosing the worst property in an excellent street to renovate is often cited as the best option. However, it depends on the worst property. If the house is not structurally sound or is a wrong property for reasons you cannot change with a renovation, it won’t matter how much you renovate it; buyers won’t pay a premium when you sell. Instead, look at properties on popular streets with nothing major wrong with them and that a renovation will change how they appear on the market.

When considering which suburbs, look for growth areas and suburbs that are growing in popularity. There are always areas where it becomes fashionable to live, so these suburbs experience growth in value faster than other areas. Choosing a renovation property in a trendy suburb can help you to increase your profits.

Economic stability and growth in the region are essential. If the whole town relies on one industry or a large factory, what will happen to your investment if the sector fails or the factory closes down? Ensure you buy a property in an area or region with good economic stability and a part where growth is happening. Purchasing a residential property isn’t a wise choice if businesses are closing down in the area. More people will want to live there if enterprises open up and expand in the area.

Finally, the location of the house itself will be a deciding factor. Consider the proximity to local facilities, including schools, access to public transport, and shops. Then look at the negatives of the house itself. Does it have easements or a right of way that impact this house but won’t affect neighbouring places? Is the property next to something undesirable to live next to? Is the property built on a hill?

Considering these factors about potential renovation properties, you’ll have far better ideas and information about the best investment property to buy.

Before you choose a property and start transforming it, you need a strong investment strategy. Your investment strategy considers your budget, timeframe, whether you employ a property manager, and how soon you want to access the profits from your investment.

Planning your budget includes not only budgeting for the initial buy-in price of the property. It also allows for all the turnover costs, including currency exchange rates, finance charges, solicitor’s fees, and charges for property turnover by local authorities. Your budget will include planned renovation costs and should indicate the expected sale price at the end of the process.

Your strategy will provide a realistic timeframe for purchase, renovation, and completion of sale. Planning your system includes the settlement periods at either end of the purchase and sale, plus allowing realistic timeframes to market the property.

When planning your strategy, you’ll need to know when to ask for advice or help from others. Especially if you are completing a renovation in a U.S. property, you’ll need to rely on local knowledge and expert assistance to work on your behalf and for your benefit. You may need to employ a property manager to manage the renovations and liaise between you as the owner and the tradespeople working for you.

Your strategy should consider where you will find your expert help and include the costs in the budget.

Setting a strategy for one property will impact your other investments, cash flow, and availability of funds, so you need to know how this renovation project fits in with your overall investment strategy.

A good framework can help you decide on the best investment property for your circumstances. The framework provides the details for buying a suitable property, checking that you have completed all the required paperwork, paid all taxes, and sorted out the legal requirements, including hiring tradespersons in the U.S. A framework can include checklists that give you the answers you need when comparing properties.

Just like the house’s framework provides the structural strength to hold up the roof and walls, your framework will hold up your investment portfolio and give you confidence in your decisions. The framework will provide checklists and details for the renovation project management and will help you when you decide to sell the finished house.

Where to go Next?
Once you have decided to buy a renovation property in the U.S., you’ll need time to work out your investment strategy and find the proper framework to suit your needs. Luckily, you do not have to do this all on your own. Plenty of investors have tested the waters in the U.S. property market before you and know where the shallows and shoals to avoid are.

Completing a course to understand the advantages of investing in the U.S. property market could help immensely. Aligning yourself with a company of investors and market experts can help you to gain the knowledge and experience you need to ensure your renovation property is a success. Choose a course that enables you to talk directly with mentors and experts and helps you plan and execute your strategy and framework in property investment.

A robust framework, expert advice, a well-thought-out strategy, and local area knowledge will help you to achieve your investment dreams. To discover more about formulating strategy, plans, and a good framework for investing in property in the U.S., you can read our blog on Why Invest in the U.S.