Buying a Property to Sell
When buying a property to sell on, one of the first things you should do is to calculate your budget carefully. Calculate on the pessimistic side as there are always unforeseen circumstances. Do not forget to take into consideration the day to day administration costs which must be factored in. After viewing a property you want to buy work out your figures. This way you will not waste any time considering properties that are financially impossible for you to buy. The best way to do this is to subtract the associated fees and costs, purchase and renovation costs from the potential selling price of property. To get to this stage you must also calculate the realistic resale value, the cost of all works to the property and the sum total of all fees and costs you will incur during the project.
Realistic Resale Value
What will the property be worth once renovated? Find out how much people are willing to pay for newly renovated houses in the area. Answering these questions will provide the information you need to make a sensible calculations later in the project. Finding out the realistic resale value will tell you whether you have a deal. It will guide you towards buying for the right price and how much it will reveal how much the property will be worth once the renovations have been completed and also help you work out your potential profit margin. Talking to local estate agents is one way to find out resale values of renovated houses.
Once you have worked out the resale value it is important to factor in the administration costs into your budget. These include solicitor and conveyancer’s fess, stamp duty, any borrowings and interest. Your lender will carry out a valuation on the property to ensure that their loan is secure. You must also take this cost into consideration. There will also be the cost of the survey on the property and Land Registry fees. When the renovations have been completed there will also be the selling agent’s fees.