Welcome! Use the popout menu < left to explore the site. You are welcome to join the Forums to chat.

Finance Menu | Buy To Let Mortgage  | No Money Down | Calculate Yield

Money in the bag or in the bin? - Lea Beven

Investing in property can be a long term or short term investment, and in both we are looking for a property return on investment (ROI).

Buying to sell is usually short term, as we can put money in and get a fast ROI on the sale. Buying to let is mostly a medium to long term investment, and we put in some money hoping to get a steady income and a possible growth in capital. With both types of investment we can choose to refurbish a property to increase its appeal. Remember - Return on investment

Refurbishing the property is done to get a higher return on your investment, and quite often we miss that point, and spend more money than we need, throwing away money. When you add up how much people throw away on a property unnecessarily, it is usually a few thousand pounds - enough for a very nice holiday. We spend a lot of time looking for the cheapest interest rates, the cheapest utility supply, and a builder that will not charge too much, yet we often miss the point that we actually spend too much time and money on a property with little return.

Refurbishing ROI On Buy to sell

Refurbishing or re-developing a property can be a costly affair, especially if we do it wrong, or waste money on things that don't need doing. There are lots of things that people will tell you need doing, but in reality when it comes to the crunch, most of the jobs are pointless and a waste of your money, reducing your ROI.

The object of refurbishing a property to sell is usually to please the eye of the buyer and increase the perceived value of the property. The best way, in my experience, to achieve a sale is to make the property clean, neutral and clear of clutter, with a tidy garden and driveway, and lots of curb appeal - the front door being very important. The idea being that whoever buys it will have nothing much to do to the property, and that it is easy for them to imagine their own belongings in the property. We need to appeal to the widest market possible, and attract the people that would normally look for that type of property. We don't want to do things that they will want to change to their own taste anyway.

Most investors take too much notice of estate agents and end up spending more money than they need to on a property. You will get advised to replace bathrooms and kitchens that do not need replacing, just because they are dirty, covered in scale, or appear to be dated. In reality you can make an old kitchen clean and funky, and nowadays we even make new kitchens that look old, so anything goes. You can tidy up a bathroom suite with new bath panels and removing old tiles and taps. Even strange coloured suites can be made to look their best with a contrasting paint job and some decent taps. You do not need an awful lot of money to make a property look the part!

So look at your buy to sell as a Return on investment. You put money into the property and you want to get money out. How much REAL CASH value is a new bathroom going to add onto your property? Against how much time and money is it going to cost you to do it. Would the same amount of value be added by replacing the taps or removing tiles & painting funky colours?

Every day that you are refurbishing is down time for your money, and if you are looking to refurbish another property after wards, you may make more money to do more a year, than spend so much time on one.

Should you put in Double-glazing? If you are a buyer, you would be pleased that it was in a property, but in most cases it would not actually stop you buying it if it was not there. So spending a few thousand pounds on double-glazing is not very likely to add a few thousand pounds to the sale price, it may sway the buyer slightly, but not really add an awful lot of monetary value.

So the key points to get a higher return on your buy to sell are:

1- Take a good look at the bathroom before you replace it

2- Clean the kitchen and replace door handles rather than replace it

3- Clean throughout the property

4- Paint in neutral colours so the buyer can imagine their own things there.

5- Curb appeal

6- Don't waste you money on double glazing unless the windows are rotten and falling out.

Refurbishing ROI on Buy to let

Buy to let development and refurbishing is a totally different game to buy to sell. You are buying something that you want keep on a medium to long term basis. This is a long term investment where you are looking for monthly positive cashflow and possible capital growth.

As a landlord you will encounter maintenance and repairs, most of which, if you plan well you can avoid, getting the highest return you can on time and money.

If we were to take a look at an old property we would see where it was worn, and what made it look tatty and dirty. Just a few of the things that spring to mind are dirty tile grout in both bathroom and kitchen, faded white appliances, broken things, tatty carpets, rusty radiators, scaled up taps, and dirty curtains and windows. Most of these things we can actually prepare for and make a long term investment.

As an experienced landlady I can tell you that using white grout in the kitchen and bathroom is going to make your property look clean and fresh when a new tenant moves in BUT in the long term the tenant may use hair dye or coloured cleaning products (pink / green) staining the grout, and of cooking in the kitchen, it is hard to avoid slashing oil and grease on the tiles. Tiling is expensive, it is usually done to protect the walls from water / food and make day to day cleaning easy on what would normally be an difficult to maintain surface. However with technology these days we have great coloured waterproof paint, stainless steel and glass sheets, and tiles quite frankly seem out of date - as well as an unnecessary burden on the environment. So begs the question, why do we tile at all?

So what about replacing bathrooms? Is it really going to make or break a prospective tenant? Is it really going to add to your investment? Mostly not, but we are all lead to believe, by young enthusiastic letting agents that a white new bathroom suite is the way to go. So your investment of between £300 and £1000 for a new bathroom is not going to give you a high ROI, in fact unless the suite is damaged, it is a total waste of investment funds that could be used towards the deposit of the next property. A tenant will love you if you fit a good shower tho.

In the kitchen there are quite a few things that make your money last longer and ensure low maintenance. Simple things like supplying a separate freezer will help the life of your fridge. The fridges with mini freezer inside tend to get broken door catches and freeze up.

Even putting in a white oven can be a costly mistake, it only takes one dinner to burn, and this could happen within days of you putting in that nice white oven, and the outside is tainted brown forever. Opt to spend a few pounds more for a stainless steel one, and it will look good for 10 years or more.

Finally the floor! I have in the past put carpets in every 6 months in some property when there has been a high turnover of messy tenants - and after a while realised that if I had wooden floorboards, I should use them. They last 10 years on a good coat of varnish, and are cleaner and cheaper that tones of carpet!

So key points for getting a good ROI with low maintainance on your refurbishment are:

1 - Don't tile a property, use waterproof paint, or splash back sheets.

2 - Use stainless steel appliances & a separate freezer

3 - Again, don't replace a bathroom or kitchen unless it is damaged.

4 - If you have floorboards, use them.

Property is an investment, it should not be personal choices or feelings that drive our choices, but it should be ROI!

Article as printed in the Property Investor News Feb 2004

Free Email:

Not a member?