When it comes to purchasing a doer-upper – a property in need of refurbishment – landlords face an important decision: “To buy, or not to buy?” Investing in a property with renovation potential can be profitable, but it requires a careful evaluation of factors. Below are five key considerations to keep in mind before making the leap.
1) Budget for Refurbishment
Budgeting accurately for a doer-upper refurbishment is essential. You’ll need to consider not only obvious repairs but also any hidden issues, such as damp or structural problems, that could arise once work begins. A comprehensive survey and inspection will give you a clearer picture of costs, and it’s wise to include a contingency fund (typically 10–20%) to cover unexpected expenses. This ensures your investment stays on track financially, even if issues emerge.
2) Selecting a Builder
The success of your doer-upper project hinges on finding the right builder. Opt for a reputable, experienced professional who has a solid track record for delivering high-quality work on time and within budget. Look for tradespeople affiliated with respected industry bodies, such as the Federation of Master Builders, to avoid ‘cowboy builders’ who may offer low prices but deliver substandard work. Seek out recommendations and make sure your contract is comprehensive, with all agreements in writing.
3) Calculating Return on Investment (ROI)
Once the work is complete, assess the potential rental income for the refurbished property. A realistic valuation can be achieved by speaking with us or other local property experts. A doer-upper investment should take into account the neighbourhood and local amenities, as these elements can significantly influence the property’s value and rentability.
4) Meeting Legal and Regulatory Requirements
As a landlord, compliance with legal standards is critical, especially when handling a doer-upper refurbishment. Health and safety standards, energy efficiency regulations, and building control approvals are all areas where compliance is mandatory. Specific works, like rewiring or replacing windows, may require approvals to ensure safety and regulatory adherence. Failure to meet these requirements could lead to penalties or additional complications.
5) Planning Your Timescale
Refurbishing a doer-upper can take months depending on the project’s scale, with potential for delays. Before committing, consider whether you have the time and patience to oversee the refurbishment. Some landlords opt to hire project managers or work with contractors who provide a structured timeline and keep everything on track. While investing in a doer-upper can be rewarding, it’s essential to plan realistically.
We’ve advised countless landlords and property investors on doer-upper projects. If you’re considering a doer-upper investment and have questions, our experienced team is here to help.
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