Investing in a property for resale is not a new concept. With popular TV shows such as The Block and numerous others on the Lifestyle channel, resales are becoming more commonplace. The idea seems basic enough: buy a house, give it a makeover, sell it for a profit. However, things are not quite that simple. If you’re considering taking on an investment property resale project, there are a few things you should know:
This is one of the most critical factors you need to consider. Understanding your target market helps to ensure that any renovations you carry out have a certain type of buyer in mind. Thoroughly research the area and find out which people will be most interested in buying the property and why. This information will give you a well-rounded understanding of whether or not your resale property is the worth the investment.
Real estate agents sound like a broken record with the number of times the word property location is mentioned. But it’s for a good reason. Properties in a desirable location tend to hold their value a lot more than properties in suburban dead spots. A good location includes easy access to schools, shops, transport and public facilities. If you know your target market and buy in a prime location, you’ve already won half the battle.
This can be a trap for rookie investors, but you must stick to your budget. Work out how much you can afford to spend on purchasing the property, and factor in any improvements you’ll need to do. You can forecast your potential resale by checking what other comparable properties in the area have recently sold for. If the potential resale amount doesn’t cover the amount of your intended investment (or if the profit margin isn’t wide enough to cover real estate fees), you should seriously reconsider your purchase and look elsewhere.
You might think you’ve hit the jackpot with a bargain-buy property in a location hotspot, but realistically, what time frame are you looking at before your property is ready for resale? How much of your time can you afford to invest in this project? This is especially important if you plan on doing much of the work yourself. If you run out of time and can’t afford a tradie, you may as well be flushing dollars down the toilet.
Bathrooms and balance
Here’s the truth: a property with only one bathroom will generally have a lower resale value than a home with two. A property with a master en suite and a family bathroom is much more appealing than one shared bathroom space. Particularly if it’s a large, multi-bedroom home. Another thing to be aware of is how the rooms are balanced. For example, a home with five bedrooms and only one living space is not a well balanced setup. The same can be said for three living areas and only two bedrooms. People like practical layouts that make sense. A home with poor balance will be harder to sell.
Check that your property has ample storage space, and if it doesn’t, make sure there is capacity to create it. Storage space may not seem like an important feature, but it’s only when a home is lacking in storage that you realise just how valuable it is.
Trends come and go, but one thing that never seems to go out of fashion is a property with a good general flow and layout. Open plan living and lots of space are usually always a winner, so rather than following current living trends, keep your layout marketable and add just a touch of contemporary living to modernise it, if you wish.
Depending on your target market, make sure the yard fits the property. For example, if your target is a young family, having plenty of outdoor space and a fenced yard will be a big green tick for your resale value. On the flipside, having a large yard space or high-maintenance garden could simply be too much work for a retired couple or corporate business person who travels a lot. What you do with the yard needs to be relevant to the property and your target audience.
Even with the perfect property there are no guarantees that your resale will turn a decent profit, that’s the risk you take as an investor. But if you keep the above tips in mind, you’ll give yourself the best possible chance of success, ready to move on to the next and build your investment empire.