Looking to renovate your property? Check out the team from Just Do Property top tips to consider before you do!
At Just Do Property our clients often ask us about renovating their property and whether it is worthwhile. The simple answer is that no two situations are ever the same but there are a number of issues to consider if looking at possibly renovating your property. While they are relatively simple they will prompt you to focus your attention, think through the numbers and ultimately decide whether it is worthwhile.
Local property price ceilings
The majority of local property markets throughout the UK will have a local ceiling with regards to property types, value and rental income. This may be area by area or even street by street but there will be an unofficial ceiling on prices and rental income. As a consequence, if the current value of your property is towards the higher end of this ceiling you need to consider whether you would receive the full value of your renovations in a real market revaluation.
If you look at local newspapers or the Internet it will very quickly become apparent at what point property valuations and rental income start to flatten out. There is also nothing wrong in approaching local estate agents and asking their advice on local prices and rental ceilings.
It is perfectly understandable and reasonable to be cautious of debt and the potential burden this can cause in the short, medium or long-term. However, if handled correctly it can be extremely beneficial with regards to property renovations. Let us assume for example the cost of your renovations was £10,000 which included capital repayments and interest. If the uplift in your property valuation would be in the region of £20,000, it is a no-brainer. You have effectively doubled your money on the cost of the renovations.
Those who have looked at renovations will also be aware that short-term loans often attract higher headline interest rates than long-term mortgages. As a consequence, once the renovations have been completed you may be able to refinance your home, taking into account the uplift in valuation, and use cheaper mortgage finance to pay off the more expensive renovation finance. A win-win situation!
Maintain a long-term focus
Whether you are looking to renovate a property in which you already live, or perhaps you have tenants, it is imperative that you maintain a long-term focus. There is nothing wrong in running a tight ship when it comes to costs and expenses but cutting corners can often lead to a reduction in quality. As a consequence, you may not obtain the property valuation uplift that you expected and in some cases remedial work may be required further down the line at potentially significant expense.
If you are struggling to finance renovations, whether looking to use savings or external funds, then you need to consider if it is worthwhile. Placing undue pressure on your finances can place undue pressure on your family and working life.
While there are many different things to consider when looking at renovations - local pricing ceilings, finance and quality of the work are just three factors - you should look at the basic numbers, do they stack up?
It is fair to say that there are occasions where local price ceilings can move dramatically if for example the employment market was booming or infrastructure spending brought greater numbers to the area. However, in general local price ceilings tend to move relatively slowly and this is something you should take into consideration.
At Just Do Property we can source below market deals for our subscribers and help to find the right property at the right price with the right finance.