Room for improvement

The experts at Belvoir Lettings show you how to transform a renovation project into a successful buy-to-let investment

Renovating an un-modernised older property can be a financially effective solution for those looking to purchase a buy-to-let investment property.

As well as being able to secure the property at a reasonable price the investor is likely to add value to the property by undergoing the renovation too. Plus, upgrading the property could potentially push up the rental return and help minimise void periods.

Renovations can range from simple home improvements to complete re-designs, depending on the property you have chosen.

If you want to invest in a successful buy-to-let renovation project choosing the right property and knowing what’s needed in order to modernise it (plus how much it’s going to cost you) before you commit to the purchase is essential.

Here, the experts at Belvoir Lettings show you how...


• Question: Why would a buy-to-let investor want to buy a renovation project?

Answer: “Investors look at renovation projects for many different reasons,” says Carly Jaouadi, property manager at Belvoir Balham. “Primarily, it’s likely to be to make extra money. Doing up the property will often improve the rental return and renovation projects can often be bought cheaper than already modernised properties. This is particularly cost-effective if you know someone in the industry who could do the property up for you at a reasonable price or you could take on some of the work yourself.
“There’s no doubt that you get more for your money with an older property too,” continues Carly. “You get more space, more character and the property is more likely to hold its re-sale value than a new-build – we’ve seen new-builds in this area come down in value by as much as £70k in recent months.”

• Question: What kind of property would make a good renovation project?

Answer: “A renovation property should be bought with its letting potential in mind,” says Carly. “Research locally to make sure there is a rental demand in the area and the rental market isn’t already over-crowded. As with buying a property to live in yourself, location can make a big difference in desirability for tenants so make sure you invest in a property in a good location with adequate local amenities and transport links close by.
“ We usually advise that people invest in smaller houses, such as studios or one or two beds,” continues Carly. “These are going straight off the shelves at the moment whereas we’re finding the larger properties are taking longer to let – four-beds and over definitely seem to be sticking.
“It’s worth looking at the type of house you’re wanting to invest in too - Victorian houses, for example, often make good renovation projects as they can usually be converted into flats or houses of multiple occupation – this will probably give the property a higher overall rental return than if it was a single dwelling.”

• Question: Where can a potential investor find properties to renovate?

Answer: “If you’re looking for a renovation project it’s always worth looking at auction,” says Carly. “We have a few landlords who say they have secured good deals at auctions, with cheaper purchase values than if they had bought them from an estate agent. However, estate agents can also be a good source of properties for renovation projects so they’re certainly worth a look.” And don’t forget to search on the internet and look at the property portals too.

• Question: What are the financial benefits of modernising a property?

Answer: The financial benefits of renovating a property can be threefold. Carly explains: “If you renovate to a good standard you’re likely to achieve a higher rental yield – although in the current climate you’ve got to be realistic about what return you can expect,” she says. “Also, a good-quality renovation could mean that you could increase the property’s re-sale value (especially if you extend the property) and make the property more desirable to buyers when you’re ready to sell.”
And we mustn’t forget avoiding the dreaded void!
“Unfortunately, void periods are something that seem to be unavoidable for most landlords at the moment,” says Carly. “But you can maximise your chances of avoiding the void if the property is modernised to a good standard – the better the condition of the property the easier it is to let. There’s no doubt that the tired properties are the ones that we’re finding the hardest to let at the moment.”

• Question: What are the top five things an investor could do to modernise a property?

Answer: “In the current climate of a crowded rental market tenants are finding faults with properties quickly during viewings and moving on to the next property if they’re not instantly happy with what they see,” says Carly.
“A new kitchen and bathroom is probably going to be essential in a renovation project and you’re likely to need to decorate throughout plus lay new carpets too.
“Even the exterior of the building can make a big difference - we always advise our landlords to make sure the outside of the property is tidy and any front gardens and driveways are immaculate.
“At a time when tenants can afford to be picky you shouldn’t let anything put them off, especially before they even get through the front door for their viewing!”

• Question: Where can potential investors get advice about which property they should invest in?

Answer: “Any potential buy-to-let investor should speak to someone at their local property management agency before purchase,” says Carly. “At Belvoir Balham we will go with the buyer to look at the property. Plus, we’ll look at its potential re-sale value and rental yield. We will be able to give feedback about the property and, ultimately, we can advise whether or not the property would make a good buy-to-let investment.”

• To find your nearest Belvoir office, visit their website at http://www.belvoirlettings.com/


Renovation checklist
Be sure to ask yourself each of these questions before you invest in a renovation project:

• Is the property in a good location?
• What are the crime figures for the area?
• Are there good local amenities?
• Is the property close to good transport networks and links?
• What is the rental demand in the area? Is the market already over-crowded?
• Has the property got signs of damp? Does it need a damp-proof course?
• Can the floor-plan be redesigned to create extra space?
• Who are you going to commission to do the work? Can you do some of it yourself?
• Have you got enough budget to pay for the renovation and any unforeseen costs?
• Will renovating the property up the rental yield enough to give you a profit?
• Does the property need a new bathroom and kitchen?
• Is the plumbing system in good working order?
• Can the property be split into several separate dwellings?
• Does the property need new carpets throughout?
• Can the renovation be done in stages?
• Does the property need a central heating system installing?
• Is the roof in good condition and how many years will it be before it needs replacing?
• Does the property need re-wiring?
• How can the energy efficiency of the property be improved?
• If you’re planning to extend the property can you get planning permission?

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