When considering the purchase of a ‘doer-upper’ – a property that requires refurbishment – landlords are often faced with a Shakespearean (ish) question: “To buy, or not to buy?”
It’s an important decision where you must weigh up several important factors before choosing to invest or not.
Below are five key considerations to keep in mind:
- Budget for refurbishment
Before purchasing a doer-upper, make sure you budget accurately for the refurbishment work. You must account for not only the obvious repairs but also any hidden issues that may arise once work begins, such as damp or structural problems. A detailed survey and inspection will help you get a clearer picture of the overall costs, and you should always include a contingency fund (typically 10 – 20%) to cover unexpected expenses.
- Builder selection
The success of your refurbishment project depends on finding the right builder. You’ll want a reputable, experienced professional who can deliver on time and within budget. Look for tradespeople who are part of respected industry bodies, such as the Federation of Master Builders, and avoid ‘cowboy builders’ who may promise low prices but provide poor quality work. Seek out recommendations from trusted sources and ensure the contract (in writing) is watertight.
- Return on investment (ROI)
Once the work is completed, calculate the potential rental income, given that the property has been upgraded. Speak with us for a realistic property valuation in its refurbished state. Consider the neighbourhood and local amenities, as these factors can significantly affect property value and rentability.
- Legal and regulatory requirements
As a landlord, you must comply with numerous legal requirements, including health and safety standards, energy efficiency regulations and building control approvals. For example, certain refurbishment works, such as rewiring or replacing windows, may require permissions or adherence to specific standards. Failure to meet these standards could lead to fines or complications.
- Timescale and planning
Refurbishing a property can take months, depending on the scale of the project, and delays are common. Before committing, consider whether you have the time and patience to manage the refurbishment process. Some landlords may hire project managers or work with contractors who can provide a clear timeline and keep things on track. Remember, while a doer-upper can be rewarding, it can also be time-consuming, so plan realistically.
Over the years, we’ve advised many landlords and property investors on this subject.
To have your questions answered by our experienced experts, contact us today.
