Refurbishment - How much value are you adding?

Refurbishment - How much value are you adding?
When it comes to the subject of refurbishment, there are many different views ‘out there’ with regard to the extent to which you should improve or maintain your property. If you’re looking at it from an investment perspective, then naturally, you could argue that the least spent, the better. There are numerous landlords who ‘get away’ with doing the minimum in terms of keeping their property habitable and thereby reducing costs, but is this really a saving? Of course, much of your decision should be based on the age and condition of the property.  In my experience, it stands to reason that the older the property, the more prone to needing full-on treatment it is.  If you are working with a relatively new property (say 1980's and beyond), then you are talking typically about much more minor repairs and typically only cosmetic improvement.  For example, a Victorian property is much more likely to need damp, roof and rot repairs than a 1930's semi-detached property or an 80's purpose-built flat.  It boils down to knowing your property type and the potential flaws it may have. I know many people (myself included in days gone by!) who are happy to slap on some new paint, replace the carpets and maybe replace the kitchen and bathroom on a property, which ideally needs far more attention.  It may only cost a few thousand to make a tired old place 'look new', but in my opinion, this is very often a false economy.  I have learnt that it is far more cost effective to deal with inherent problems and 'see a building for what it is' from the start.  You can then deal with any issues that arise thoroughly and mitigate any future possibility of being 'bitten on the bum' by a nasty surprise! One of the most important factors to take into consideration when taking on a refurbishment project (aside from the cost) is the team you choose to work with.  It is undoubtedly crucial to find a good, reliable and efficient set of trades people to do the works needed.  I cover this in more detail in my new book, Why Property Works, amongst many other great tips on this subject. I have put together a list of common issues you need to watch out for when looking at any project you think may need refurbishment, to whatever degree.  It is not exhaustive, just a few of the things I have come across during my property career:
  • Damp patches at floor level or just above skirting board (taking a damp meter when you do viewings is VERY handy!)
  • Damp patches on walls or at ceiling level - check whether dried out old repairs or ongoing problem
  • Smell of damp is a giveaway even if you can't see it
  • Signs of rot - this may be in different forms, anything from looking like a spiders web to black, spore-like mould
  • 'Bouncy' floorboards - again a possible sign of rot or wood worm infestation
  • Peeling paper - again, maybe a sign of damp behind
  • Cracks in the walls - hairline cracks are generally just a sign of plaster drying out or historical settlement movement and not normally a problem, but anything bigger (can you fit the edge of a 10p piece in?) or going across on a diagonal is worth proper attention by a professional
  • Old electrical fittings - will probably mean that the electrics need updating or replacing altogether - check the consumer unit also to estimate the age of the electrics
  • Back boilers - will usually be found behind old gas fires in older properties - I would recommend replacing with new central heating
  • How old is the boiler and central heating system?  Is it under guarantee or being regularly serviced?
  • Wooden/metal/sash windows which are original can be a pain to maintain - check whether an upgrade to UPVC is worthwhile and if in a conservation area, even possible
  • If UPVC already, are they in good order and are the locks working?  Many windows can be 'brought back to life' with a good clean and perhaps some replacement glass
  • Broken guttering or external fixtures?
  • Check if the chimney is straight and in good order
  • Look into roof voids where possible - check chimney supports, roof, rafters, etc
  • Look at outside roof lines to see any distortions, as well as missing or broken roof tiles
  • Are there any signs of problems with the brick or render exterior?  Remember that render can be a great 'cover up' for potential problems, just as much as wallpaper on the inside!
  • Is the lead flashing in good order?
Remember, the key is to get a proper survey done to check out the extent of works needed.  Taking the view of the professionals is the best way to mitigate against risk of any form. This goes for damp and rot problems too and any structural issues. You are at liberty to instruct the services of a timber and damp specialist as well as a structural engineer if you suspect any issues in these areas. The benefit of taking on a property with perhaps more than the need for just a change of wallpaper is that there is more potential to negotiate on the price and increase the end value.  If you have to take into account a full refurbishment, then this must be taken off the offer price you'll make. It also means that you'll know what has gone into the project (from re-wiring to wall and floor insulation, new plumbing to RSJ's, etc.) and that can lead to massive peace of mind. We made the decision some years ago to 'do the job properly' on each property we took on and so far, it has been a great move. This concept leads to owning a sustainable portfolio of properties, which will be good for the long-term, better energy efficiency and ongoing decent tenants and rental revenue. It also means that you are adding real value to your deals rather than a few thousand, at best. This is surely a great recipe! The question is, why cut corners when you can ensure your success from the outset? To healthy, happy properties...and their owners! Hazel de Kloe Property Investor | Property Mentor | Speaker | Author The contents of this article are for educational purposes only and we make no recommendation of any particular investment. The price of property can decrease as well as increase and you make any investments in property at your own risk. © Why Property Works 2014 |