In today’s economy, the rental market is flourishing for property owners, where there is no time like the present when it comes to making a housing investment. Renting your property is a great way to earn a passive income and supplement your current financial situation. In addition to this, you can also diversify your assets and establish a strong property portfolio with a range of different investment opportunities.
If you’d like to jump on board this opportunity, then you may be wondering how exactly to get started. One way to get hold of a property or multiple properties at a reasonable price is to look for them at auction, where this is often the way that buildings are sold if they require renovations. You then need to consider how you will carry out any necessary maintenance work before you find a tenant and begin earning.
Read on for a step by step guide to the property renovation process, with an insight into all the actions you should take and the financial rewards on offer.
Properties At Auction
A great way to find a property bargain is to attend an auction, where this presents numerous benefits compared to buying a house through an estate agent or through alternative means. In addition to providing you with a good deal, the auction process is also quicker and more direct than other purchasing methods, where the house is yours once the hammer lands.
Auction is typically the place where properties will be sold if they are in need of serious renovations or where a change of use could be an option. This means that you can quickly increase resale value of a property by securing it cheaply at auction, whilst also finding a house that can be remodelled for the rental market.
In addition to this, the open platform of an auction house means that everyone has an equal opportunity to place a bid in the same session, which can be more workable than the first come first served atmosphere of the estate agent process. Competitive bidding will help you gain reassurance about the property’s value, where this can also result in getting the property at a lower price than you initially anticipated.
If you’re not familiar with the auction house environment, then it can be intimidating. Here’s some key things to consider if you’re looking to make a property purchase at auction:
● Thoroughly research the area where you’re looking to make an investment
● Contact the auction house to arrange a property viewing
● Obtain a copy of the auction particulars and legal packs for more details
● Be punctual on auction day and maintain an awareness of any alterations to the sale
● Make clear and calm bids throughout the auction process - and stick to your budget
● Be aware that the hammer falling binds you to the terms and conditions of the sale
● Be prepared to pay the deposit quickly and meet the required payment terms
Surveys & Property Inspections
A building survey is a professional service which consists of a property inspection and the filing of an official report. The surveyor will produce a report outlining potential problems with the building, where this may include advice on important repairs and maintenance needs. If you’re buying a property through an estate agent, then the ideal time to book a survey is after you’ve made an offer, but before you’ve signed and exchanged contracts or put down a deposit. This can allow you to renegotiate a price based on the surveyor’s report.
When buying at auction, the purchasing process is much quicker, meaning it is recommended that you arrange a survey before you place your bid in the auction house. Once the sale is complete at auction, it is difficult to back out later without losing your deposit and paying additional fees.
Budgeting & Timelines
It is vital when buying a property at auction that you already have a budget plan in place. The auction environment can be intense and overwhelming, where it is easy to get swept up in a bidding war and end up spending more than you planned. When preparing your budget, it is important to consider the initial price of the property plus how much you’re willing to pay for renovations and maintenance.
Some points to consider when anticipating costs can include:
Employing an architect - For large scale remodels or extensions this may be essential, but for smaller works you should consider if you can do this work yourself. You may also be able to employ a draughtsperson instead, or ask your building contractor to draw up plans.
Schedule of works - It is then vital that you plan out what works need to be completed, with the inclusion of anticipated deadlines and costs. This can help you to see what services you need to enlist, and in what order these tasks should be completed.
Materials - If you are planning to complete some of the renovations DIY-style, then you should ensure that you’re accessing construction materials from a reputable supplier. Always compare quotes before making a final purchase to ensure you’re getting the best deal.
Recycling - It can also help you to save money if you recycle or repurpose materials such as bricks and timber from the original property, especially if these are still in good condition. You can also look for second-hand kitchen units and furnishings to further cut costs.
Contractors
Even if you’re looking to cut costs, it is likely that you’ll want to hire a contractor to take care of the major renovation tasks within your property. It is always best to work with a professional if you’re undertaking structural repairs, dealing with electricity or fitting new plumbing systems. Compromising on quality or attempting large repair work yourself will only result in increased costs further down the line. Also, the better your property looks once it's complete, the easier it will be to find a tenant.
When choosing your contractor, it is best to compare at least three different quotes to ensure you’re getting the best price, but it is also important to note that the cheapest service may not offer the best quality. In addition to this, you can browse online reviews and recommendations to find a suitable team to work on your project. Word of mouth recommendations are also essential in finding the best people for the job.
Renting & Tenants
Once your property renovations are complete, it's time to start looking for a tenant. Posting an advert online is the best way to do this, where you can also ask your extended network to see if anyone you know is on the lookout for a rental property.
Before setting your rental price, it is important to look at the fees charged by properties in the surrounding area so you can ensure that your rates are reasonable. You can then interview potential tenants and hold viewings to find the right match, where you may also wish to ask for references or a guarantor.
Benefits Of Making A Property Investment
Once you’ve invested in property and found a reliable tenant, you will begin to understand the numerous financial benefits on offer, where these include:
A passive income - once you have found a tenant to rent out your property, you can enjoy receiving a simple and recurring income on a regular basis
Returns on your investment - house prices are likely to rise over time, allowing you to cash in on your investment if you do decide to sell
A diversified portfolio - it is always best to invest in a range of different sectors and industries to protect your money, where property can provide one of these options
Low risk - property is a relatively reliable sector to invest in, where the market tends to recover after periods of economic difficulty
Lev Properties: Simplifying The Property Investment Process
It may feel daunting to undertake all of this work to secure and set-up your property investment, which is where Lev Properties can help. We can take care of the entire process on your behalf, from sourcing a property at auction to carrying out renovations and finding a tenant.
Our portfolio includes an impressive selection of Liverpool properties, where we also offer a range of stylish holiday lets to further diversify your investments. Contact us to kick start your property journey today.
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