Jess Chambers
February 5th, 2021
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How do you get the best property for refurbishment?
How do you plan a property refurbishment?
What are the average house refurbishment costs?
Do you need planning permission during property refurbishment?
How to get your finances ready for property refurbishment
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Complete Guide To Property Refurbishment
Have you got your heart set on finding a refurbishment property to fix up and flip at a profit, or alternatively rent out? Renovation projects are appealing, as the profits can be exceptional, but you need to make sure you plan meticulously, stick to your budget and your timeline.
Buying a property to flip it does sound appealing, but in order to actually make that profit, there are quite a few things you need to take into consideration. We’ve put together this step by step guide on how to refurb a home and make some good money in the process.
This is the single most important part of your whole renovation project, and it’s before you’ve even started! Choosing the property you’re going to renovate is tricky, you’ll look through tens if not hundreds of opportunities before picking the right one.
You need to take into account the purchase price of the property, the cost of renovations or refurbishment, how long it will take and what that will cost, and the cost of selling it, after all, it is said and done what you will achieve for it on the other side.
When you’ve planned all that out, and you have all the figures lined up, you’ll know exactly what you can pay for the property initially.
But wait! We can help.
We specialise in connecting investors to below market value property opportunities. We do all the working out, estimating exactly how much the renovation or refurbishment might cost and talking to you about your time constraints and personal situation to determine whether it would be a profitable deal for you.
Now hopefully you have a good idea of how to find a decent house to flip a deal, it’s time to actually plan out exactly how much the refurbishment, or renovation, might cost you to assess its potential.
This depends completely on the state of the property that you buy, but you should look around the property and envision the work that needs doing, note it down and try and research prices in that specific area to complete the work – if you’re capable of doing any of the work yourself and reducing cost, we would massively recommend it as it will impact your margin significantly.
What structural issues to look out for when refurbishing a property?
You can do the basics of this yourself by just looking around the property – you should immediately be able to find if there are any major issues with the property that will need fixing, here are a few of the main things to look at:
- Damp – This can be a serious issue, and expensive to fix, you should look for any giveaway signs of damp, which is mould, the walls being cold, plaster flaking (especially new plaster!) and watermarks anywhere on the ceiling or walls.
- Roofing – The roof can be a very expensive thing to replace, so ask all the questions you can about it, and try to do a visual inspection which can be a little tricky, you might also ask to see the loft space if possible, you don’t want to see any light! Flat roofs can also cause issues so that is something to be aware of.
- Cracks – We’re not talking about small cracks in plaster, but look around the property both outside and inside for any large cracks – this is particularly important in looking between any extensions and the property itself as it could be a sign of an extension not having the correct foundations or subsidence issues.
These can all be things that are majorly expensive to fix, and if you find any of these issues you might want to get a professional quote before making a bid of any kind.
When you’re looking for a renovation property it’s likely that you’ll have to undergo a lot of the standard refurbishment projects from plastering walls to putting in a new kitchen, and you’ll need to budget for all possibilities.
It’s worth noting that location has a lot to do with the overall price of certain projects as the cost of labour can vary wildly with locations like London costing a lot more than Durham for example.
That being said, we’ve provided a look at some of the most common jobs and the estimated cost:
| Job | Estimated Price |
|---|---|
| Plastering (small room) | £400-700 |
| Double Glazing (per window) | £400-600 |
| Installing Central Heating | £3,000-5,000 |
| New boiler installation | £1,500-3,000 |
| New kitchen | £6,000-10,000+ |
| New bathroom | £3,000-£8,000 |
Other things that will cost far more, and are too bespoke to put an estimate on are the likes of loft conversions, extensions, garage conversions and the aforementioned structure issues.
Bear in mind that not everything goes to plan, you should always set aside an extra 10-20% just in case the project goes over budget for factors outside of your control, it happens no matter how much you plan everything!
Depending on the extent of the renovation you might want to look into getting planning permissions for the property to extend it. Sometimes it can be a great idea to do so, as an extension can add significant value especially if it moves the house into a new category of audience, for example adding an extra bedroom from a two-bed to a three could make it more desirable as a family home.
For major work like this though, you’ll often need planning permission. This is something your local council provides and it’s not always the easiest thing to get a hold of. There may be significant work you can undertake without the need for permission though, such as
- Internal alterations
- Smaller extensions
- Smaller loft conversions
- Minor changes to your garage
Aside from that, if you are planning on undergoing major work and adding a bedroom, bathroom or extra space, then you’ll likely need to apply. The downside to planning permission is it’s something you need to account for in your budget, not monetarily, but in terms of the cost of your time.
It can take upwards of two months to get the planning permission process complete, and sometimes that can span far longer depending on the local council the property falls under. In order to get the permission you also need to have a lot of information at the ready:
- Floor plan
- Materials you’ll use
- Elevation levels
- Location plan
- Block plan
Then, and only then are you ready to actually apply. You’ll start by submitting the document, then the council will check the validation, you then might need to pay, the council will consult your neighbours and finally provide you with a decision.
The other thing that you might have to contend with if you are making changes is building control. You’ll need this service if you are planning on doing any structural alterations such as changing a supporting wall for example. This is a process that basically ensures that the work is done in the property to a regulated standard and the certificate to certify that is required when you come to sell the property.
A critical element of turning a profit when you come to buying a property to refurbish is to be strict with your finances and stick to your budget. As mentioned above, do all the planning and understand exactly what you need to spend to flip the property for a profit.
A lot of people fall down at this point and over renovate. You need to renovate the property to sell, not necessarily make it a state of the art designer property. The house will have a ceiling price in the particular area, you don’t want to spend too much renovating the property to the point that it isn’t worth what you’ve put into it.
Also – always account for 10-20% over expenditure on your renovation planning, there’s always a chance that not everything will go to plan and you might uncover further issues that you hadn’t accounted for. Building in a buffer to your finances will leave you with a bit of wiggle room when it comes to turning a profit.
This is also an important aspect of flipping a house, time is of the essence and you need to ensure that you renovate the property and sell it as quickly as possible to maximise profit. Often people don’t realise the significant cost of certain smaller projects taking longer and having a knock-on effect in terms of timing.
Part of your budget planning needs to come down to the time you think it will take to do all the work required. Here are some of the costs to consider that will increase over time:
- Council Tax – This will fluctuate depending on where the house is, but on average you can expect to pay around £120-150. If no one is living in the property then some councils will give you a discount, so be sure to ask the local council.
- Utility Bills – Water, Gas and electric bills, which will typically be around £60 a month, maybe more if you are using a lot of power tools for the on-going work.
- Insurance – If you’re flipping the house unless you’re keeping a lot of tools in the property, you’ll just want building insurance. You tend to be able to get this quite cheap, depending on the property, but you’re still looking at an additional £10-20 a month, it adds up!
- Mortgage? – If you’re not a cash buyer, then you might have to consider monthly mortgage payments, which can obviously vary considerably due to mortgage rates and the amount you’re lending.
The profit in your project can easily spiral out of control if the project runs over by a few months, costing you hundreds in bills and eating into your overall margin.
Another often forgotten factor is the sales process. You might just assume that if you refurbish the property to high standard buyers will come, but unfortunately, that isn’t always the case. Your property might sit on the market for months, and you need to be aware of that and be wary of the cost which will eat into your profit.
The best thing we can advise here is to price your property correctly and to go quickly. This needs to be built into your original planning, we always advise that when you come to sell the property, put it to market below market value to return a quick sale – if it makes sense to do so, of course.
To conclude, renovating a property can be an extremely profitable thing to do, but you need to plan it out correctly and understand the process and procedures as well as finding the best initial deal to maximise your profits.
It can be a painful experience if you don’t plan everything outright, wasting time and money. That being said, we can help ensure that you get the best possible start!
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