Here is a top property investment secret for you…
When I am on the lookout for new properties to invest in I always look for ways that I can add value.
This has worked well for me every time and it will work for you too.
Is it possible to add value to every property?
Technically yes; but it is not just about adding new coats of paint.
You have to be patient with property investment. Finding the right property often takes time and if you are new then it can be very frustrating looking at one property after another and not finding anything that really “grabs” you.
But that is the name of the game!
When I look at a residential property I always ask myself “would I be happy to live here?” If the property is not in the best condition and needs some renovation then the question becomes “with the renovations I have in mind would I be happy to live here?”
If you wouldn’t be happy to live in a property then how can you expect other people to want to live there?
OK there are people that are on a budget in the rental market and will put up with almost anything. If you are in that market then you are probably going to have to show your properties to a lot of potential tenants before someone agrees to take the deal.
This is not something I would recommend.
It is not about Gold Trimmings
Look I am not suggesting that you fit out all of your properties with chandeliers and gold trimmings. That’s not what it’s about. But any property that I show a perspective tenant or buyer needs to look clean, have everything that they need and feel like it would be really nice to live there.
You will be surprised about the kind of transformation you can make to a property for a fairly small outlay. If the property is structurally sound (which it needs to be and you need to check this) then you can add a lot of value by conducting a thorough clean and adding tasteful decoration.
When I say a thorough clean I mean really thorough. You can get a professional cleaning company in that will clean every nook and cranny of the property. If you want to do this yourself then that’s fine but be prepared for some hard work. It is a lot more than wiping surfaces clean.
The two rooms that will sell a property (or persuade a tenant to rent it) are the kitchen and the bathroom. If either of these look shabby in any way then you are going to struggle. With a lot of my properties I completely replace old kitchen and bathroom fittings with new ones and add new tiles as well.
When the rooms in your property look clean and new you will be able to sell for the highest price or demand the highest rents. It will not take long to make a deal either as prospective buyers or renters will love what you have done and will want to move in straight away.
You need to Develop a Vision
Some investors will be naturally able to do this from the start and for others it will take a while to gain the necessary experience. I can look at a property now and have a vision about how I can transform it to how I want it to be.
Not every property is going to be suitable for this which is why you need to be patient. I am involved in the HMO (house in multiple occupation) market. This is a term that we use in the UK and in other countries they use terms like multiple occupancy residencies to describe the same thing.
So when I am looking for a suitable HMO property it needs to have the potential to fulfill my vision. HMO properties are large and the idea is that you can convert them into a number of different rooms which you then rent out to multiple tenants.
One of the things that I pay particular attention to is “private space”. Although people will share a bathroom it is never their preferred option. So I think about how I can add a private bathroom to every one of the rooms that I want to rent. Does the property have the scope for this?
Then there are communal areas. It is always a good idea to have a place where the tenants can relax, meet up and get to know each other. In the UK the weather isn’t great most of the time so this needs to be inside. Most tenants appreciate a nicely decorated and appointed communal area.
What can you do to Add Value to a Property?
So when you are looking at different properties to invest in think about how you can add value. Here are some of the things that I think about when considering the purchase of a property:
Can I Add more Rooms?
I have already discussed adding a private bathroom for all of my HMO tenants but you can think about other rooms here. Is it possible to add another bedroom so that you can rent it out to another tenant? Is there a cellar or a basement that you can transform into a recreation room? Can you get planning permission to add an extension to the property?
How is the garden looking? Is it overgrown or just a patch of grass? Can you do some landscaping to make it look inviting? A good looking garden area will certainly add appeal to your property.
The External Appearance
How does the property look from the outside? Does it look tired with paint peeling off and other problems? When people come to view a property the first thing they see is the outside. If it doesn’t look to good then this will put them off no matter how good it is inside. Make the outside of the property look as good as possible.
These days people have a lot of stuff. They will look at a property and think “can I keep all my stuff in this place?” So you need to think of ways that you can provide extra storage. Built in wardrobes for example? What about storage space under the stairs? There are lots of different things that you can do here.
Give People what they want
Think about all of the things that people need to do at home. They need to prepare and cook meals, wash and dry their clothes, wash their dishes, store food properly, bathe in privacy and so on. So provide useful appliances such as washer / dryers, a dishwasher, a good stove for cooking etc.
Make each room look clean, bright and appealing. Add fresh paint in neutral colours as these will appeal to most people. Make sure that bathrooms and kitchens sparkle. If carpets are tired looking then replace them. Wooden floors can be a good choice.
Adding Value is a good InvestmentYes it will cost you money to add value to your property but usually not as much as you think. Focus on how easy it will be to sell or rent your property for the price that you want if it looks great and provides people with what they want.