Tag Archive | "decent price"

Setting a Renovation Budget for Your Real Estate Investment

When buying property to renovate and sell, if your goal is to make a profit you have to take into account what kind of profit you want to make. i.e. What will be the return on your investment (ROI).

Buying a house cheap, and doing the minimum necessary to renovate it, may well make you some money on the deal because you have taken a house in disrepair and sold it in a liveable condition.  However, there is always the danger that you will find more wrong with the house the longer you work on it and the more you have to dig into areas not easily seen on first inspection.

You have to have a strategy when it comes to renovating a house, because without being firm and decisive you will allow far too much slippage when making decisions, and it is this slippage that can turn a nice profit into a mediocre one or worst case, a loss. Instead of taking an overly flexible strategy, you need to have a plan when deciding what work you will do. Sticking to your strategy – up to a certain point, anyway – is important because if you fail to stick to your plan, costly overruns can eat into potential profits.

Equally, though, you need to be ready to spend money to make money. Being conservative and unbending as regards your budget could see you not reaching a decent price on the sale of a renovated property. Budget an amount necessary to make the house compatible or slightly better than similar homes in the neighborhood. This way your house will be more attractive to potential buyers.

Have a budget you would like to stay within, and a slightly higher “contingency budget” which allows for potential mishaps along the way – by doing this you will increase potential profit and get a good ROI.

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