4 Things to Do Before Buying a Renovation Project
It shouldn’t surprise you that I know a thing or two about renovation projects. What you might find surprising is the amount of thought I put into each project before I decide to take it on.
It would be nice if it were as easy as it seems on TV and you could simply show up with your tools and get to work. But to get the biggest return on your investment of time and money, here are 4 things you should consider before taking the plunge on a renovation project.
Be realistic about your ability to manage the size and scope of any potential project. Will it be limited to simple cosmetic changes like fresh paint, new light fixtures and refinishing wood floors? Or will it involve gutting the entire house and replacing everything except the exterior walls?
Also, how much of the work are you truly capable of doing on your own? Be honest, because a botched DIY job can end up costing you money in the long run.
Run the numbers and figure out what you can realistically afford. When creating your cost sheet be sure to account for potential project delays. The saying “time is money” is absolutely true, and depending on the extent of the required renovations, any delays can burn through a large portion of your construction budget, leaving you with an empty bank account and an unfinished home.
Zero in on a preferred geographic area, preferably one that’s conducive to turning a profit. “Location location location” is another true saying, and where your project is situated is key to getting the most from your investment. Assess how much competition there will be from other homes and condos on the market when you’re ready to put the finished product up for sale. Also be sure to research the town’s foreclosure rates, crime statistics and the quality of the schools, as these will directly affect property values. Having the nicest house in an undesirable area isn’t anyone’s definition of a wise investment.
After you’ve nailed down the project specifics, projected costs and the location of your renovation home, be sure to align yourself with a reputable, knowledgeable and trustworthy mortgage professional, property inspector and real estate agent. They’ll help you decide whether or not to sign on the dotted line, as this type of investment can be risky. If you go for it, they can help minimize your financial risk and potentially maximize your reward with a quick sale at market value.
A venture like this can turn into a great experience or it can be baptism by fire and you can get burned. That’s why before moving forward with the purchase of a renovation project you should educate yourself about the process and learn about the mistakes others have made and avoid them. Good luck!
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