When hunting for property, many buyers are looking not just for a home they’d like to live in, but also for an investment opportunity. If you’re planning on buying a home to renovate, there are plenty of things you’ll need to consider.
While this is often a reliable way to turn a more profitable return on your investment, buying a ‘fixer-upper’ is not for everyone, and there may be elements to such a large commitment that you haven’t already considered.
Spotting a property with better-than-average investment potential can be difficult, especially if you’re a first-time buyer at the start of your search. So, we’ve created a checklist of features to look out for and categorised them based on how much value they might add if you use them to your advantage.
Potential to add space
For most properties, the biggest opportunity to add value is to increase the square footage. You can do this by extending the property (or adding to an existing extension), adding a conservatory or building a second property on the same site. The key feature you’re looking for is unused outdoor space that you can build into.
Look out for:
• ‘Side returns’ on terraced properties, i.e. a narrow strip of garden between the house and its neighbour
• Secondary structures, such as outhouses, that can be connected to the main property
• Land on which you could build a summer house or garden room
Potential for visual improvements
Improving the aesthetic appeal of a property can add some value. Crucially, you’ll need to snag a bargain by looking past features that other buyers find off-putting, with the intention of changing them once you move in.
Look out for:
• Original features, such as floorboards, wooden beams or fireplaces, that are in poor condition but can be restored
• Unusual or dated decor that can be removed or replaced
• Unattractive exteriors, which can be disguised with cladding or climbing plants
• An existing extension or garage on which you could add another storey
• Adjacent plots of land available for purchase
Changes like these will usually require planning permission. For an indication of how likely this is to be granted, take a look at nearby properties to see if any similar work has been completed.
Potential to reconfigure space
The second biggest opportunity to add value is by creating more usable space in a property without adding to the square footage. This can be done by converting a previously unused area, or by changing the floor plan. Any additional living space is a plus but creating an extra bedroom will add the most value.
Look out for:
• Unconverted garages, attics, and basements with the potential to become a bedroom or reception room
• Small kitchens next to larger dining rooms or living rooms, which can be combined to create an open plan living area
• Single bedrooms next to much larger ones, which can potentially be equalised by moving an internal wall
Walls can only be easily moved if they’re not load-bearing, and not all garages, attics, and basements are suitable for conversion. So, you may want to check with a surveyor that you’ll be able to carry out the work you have in mind.
Potential for functional improvements
If you’re looking at older properties, there can be substantial opportunities to add value by bringing them up to modern standards or adding newer features that will perform better.
Look out for:
• Outdated kitchens and bathrooms, to which you can add higher-quality appliances, improved storage, and attractive surfaces
• Poor Energy Performance Certificate ratings, which can be improved in various ways from upgrading the heating system to adding solar panels
• Traffic noise from nearby roads, which can sometimes be dramatically reduced with double glazing and sound insulation
This type of work can be quite expensive to undertake relative to the added value it offers, but you’ll also benefit from the upgrades while you live in the property. The more work there is to do, the more potential there is to add value. But it’s easy to take on too much and be left with a project that needs more time or money than you can give it. Be careful to match the amount of work required with your level of ambition.