When investing in property there are a number of important factors to consider. Perhaps the most important factor to consider is the overall profitability of the investment. In order to enhance the profitability of an investment, investors should aim to enhance the value of the property prior to sale. There are a number of ways in which an investor can do this.
Firstly, and perhaps most importantly, investors should look to ensure that their property has been adequately maintained throughout its life. While maintenance can be a significant cost to landlords and property investors, it is to protect the value of their investment. Maintenance can come in a number of different forms, from everyday maintenance such as leak repairs, to long term maintenance such as roof replacements. While regular maintenance can be easy for property owners who are living in the property, it can be more complicated for buy-to-let landlords. Property owners living in their property can regularly inspect the property to ensure that it is operating effectively. On the other hand, buy-to-let landlords may not be able to regularly inspect their property, which may lead to long-term depreciation of the asset. With this in mind it is important for landlords to regularly inspect their properties to ensure that they are in good condition. It is also important to note that maintenance issues such as a roof leak, will be cheap to fix, but if it is left unattended to, it could grow to a much larger, more expensive issue. In order to ensure adequate maintenance, property owners can enlist the services of a property manager or facilities manager to ensure that the maintenance of the building is supervised by a professional.
Secondly, property owners can enhance the value of their investment through renovations or refurbishments. Renovations can be a useful tool for property investors as they can alter the specifications of the property. The creation of a driveway or garden can be a great way for property owners to add to their investment although there are some important factors to consider prior to any renovations. To begin with investors should determine whether they require planning for any renovations, the addition of a garage is generally exempt from planning, but the addition of an extra room may require planning approval. Given the fact that planning approval can be a time consuming process, it is important to factor it into any decisions. In addition to this, landlords should understand how they will be funding the renovation. Bridging loans are a useful tool for property owners who wish to renovate their property. The short term nature of bridging loans makes them ideal for renovations, enabling the borrower quick access to funds which can be used to enhance the value of their asset. Another way in which property owners can fund their renovations is through a remortgage or drawdown from their existing facility. While these options are an attractive alternative to bridging loans as the cost of the renovation can be spread over the life of a long-term mortgage, the borrower may end up paying a significant amount of interest over the lifetime of the loan.
Another way in which property owners can enhance the sale value of their property is by enhancing the sale day appeal of their property. This can be done in a number of ways. Firstly, property owners should ensure that their homes are clean and tidy when any prospective buyers are viewing the property as this will enhance the appeal of the property. Secondly, property owners should undertake small, aesthetic refurbishments such as painting their walls and replacing any fittings. This will improve the properties specifications and enhance buyer appeal.
Property investors should also be wary of over-capitalising on their property. Over-capitalisation can be avoided by having a thorough understanding of the property market to ensure that the cost of the property, along with any renovations, does not exceed the selling price of the property. An example of over capitalisation would be where an investor buys a property in an area with low property values and conducts an expensive renovation. While the renovation will likely increase the value of the property, the investor should insure that the cost of the renovation does not exceed the value it adds. In order to avoid this, the investor should research the property market and consult with a mortgage broker or real estate agent to ensure that they are not over-capitalising on the property.
Finally, property investors should consult with a real estate agent when selling their properties. Real estate agents are able to effectively market the property to their extensive network of property buyers, ensuring sufficient interest in the property. In addition to this, real estate agents can leverage their industry experience to negotiate a fair sales price, protecting the interests of the seller and securing them a good return on their investment.
In conclusion, while there are a number of ways in which to enhance the sales price of a property, many of them require an in-depth knowledge of the property market. In order to ensure you are well-informed, it is important to consult with industry professionals such as real estate agents and mortgage brokers.