December 11th, 2014.
The 5 Knows For Saying Yes To Acquiring A Dilapidated Property
Billionaire Warren Buffet once said that the secret to his great success was very simple. He said that it was found in him saying “no” 99 times out of every hundred good opportunities. This allowed him to focus on the one great opportunity that came along and make sure it was a success.
The same is true when you’re looking to acquire a dilapidated property.
Because as fun as it is to dream of buying a rundown property for a song, transforming it, and selling it on for a fortune, there are 5 things you need to “know” before saying “yes” to a potential property investment.
Here they are.
#1 Know the Market
The inexperienced investor often makes the mistake of purchasing properties in multiple areas simply because of the bargains he or she is able to acquire them for. But the seasoned investor recognises that spreading yourself too thinly keeps you from gaining mastery over your market. It causes you to guess at the market value of the property, guess at the quality of the surrounding neighbourhood, and guess at the needs of people buying properties in the area. The better thing to do is to search for concentrations of rundown buildings within a relatively small geographic area.
#2 Know your Limits
The limits we’re talking about are financial limits. And to determine this will require closeconsultation with your bridging finance broker. Your broker will help you assess your own financial situation with regards to the demands and obligations of the finances involved. Because the last thing you want to do is commit yourself to an acquisition that leaves you needlessly overextended.
#3 Know your Margins
Buy cheap and sell high is a well-tested rule of thumb when it comes to buying. But many investors make the mistake of not knowing how much they are willing to pay before submitting their first offer for the derelict property. And adding insult to injury, they make this offer without any idea of how much they might be able to get from the property either through rental income or through selling it. Ignorance of one’s margins opens one up to making poor financial decisions.
#4 Know the Rules
Aka be aware of planning permission regulations. These rules will play a huge part in whether or not you can make the changes you envisage to increase the value of a property. So you need to check how easy it is to get planning permission. But also you want to check the deeds for the house to find out where boundaries for the garden lie in the event that you want to add any extensions to the property. Consulting with a surveyor will help you accurately assess the state of the structure of the house, and know what modifications you will be required to make in order to rent out the property.
#5 Know the Costs
After talking with your surveyor, you will have a good idea of the amount of work that the property will require. This figure will be useful when talking with your team of bridging finance brokers. That’s because they’ll be able to help you realistically calculate how much financing your project will require, identify the best solution for your needs.
So remember, before you say “yes” to your next dilapidated property acquisition…be sure to check what you “know” first. And if you’re ready to find out what your options are for financing your purchase, get in touch today.