Lettings Direct - Letting Agents, Property Management Specialists and Buy to Let Experts.
Generally, if the property can be sourced at the right price and there is an accurate cost for the refurbishment work, then they can prove to be excellent investments with substantial capital growth potential. The only downside is when either the property has be bought for too much or the cost of the works hasn't been calculated correctly, then profits can quickly be eroded and have been known to turn into losses. The danger is that the potential of refurbishment properties has been highlighted heavily on life style property programs and are very popular, so this means often you are in competition and paying over the odds. The property refurbishments do need to be carefully costed, especially if you are yourselves, as often what seems to be a straight forward job, often turns into a succession of jobs and the basic rule of thumb is to calculate the cost and then triple it. Obviously, this is different if you have contractors who have quoted to do the complete refurbishment.
If a house just needs a little updating, perhaps redecoration and a new kitchen or bathroom, then that is pretty straight forward, however if there is more damage, in particular structural works, then this does need an expert opinion - the danger you face is that if you are buying at Auction (where most refurbs end up) then once the Auctioneers hammer goes down, you have entered into a legally binding contract and it’s too late to pull out. Another danger is can you borrow against the property in its current condition - again, heavier refurbs will be cash purchases.