This post was written in partnership with Online Mortgage Advisor
Snapping up a property at auction is a smart move for investors, with houses going for around 85-90% of their market value. The catch is, though, that they often need a fair amount of TLC and a bit of a budget. That’s where renovation comes in.
With some handy tips and expert advice, you can create beautiful spaces from dark, damp properties, turning a lifeless house into a welcoming home.
View the property first
Pictures can be deceiving, so viewing the property is a must before you put down any money. When you view, bring a notebook to jot down notes on the extent of work needed and any initial ideas you have.
Taking your own photos is highly recommended, too, whether to look back on yourself or to show contractors.
If this is your first time renovating an auction property, it’s worth bringing an architect with you. They’ll have a clearer idea of what needs to be done to bring the house up to scratch, getting your project off to the right start.
Always start with your budget
When renovating an auction property with a mortgage, there are a few things to consider. It’s important to determine whether the property is eligible for different types of financing including getting approved for a mortgage when you have a history of bad credit. Some UK banks may have restrictions on funding auction properties so be sure to speak with a specialist mortgage broker or financial advisor to understand your options.
You’ll also need to have a plan in place for the renovation, including a detailed budget and timeline for the work. Communicate with your mortgage lender to understand their specific requirements for the renovation process.
After purchase, begin by working out exactly how much you have to spend. A smart idea is to then put away at least 10-15% of your total budget for unforeseen emergencies – because there will inevitably be a few!
Flesh out your budget by gathering estimates and quotes for the work you’re planning to do. These don’t have to be spot on but should be based on research.
Remember, your budget doesn’t have to be created in one go. You might not be able to start looking at quotes until you’ve worked out some initial design plans, which is completely fine. Just keep track of your expected spending as you build on your ideas.
Don’t skimp on sustainability
Sustainability is essential in residential architecture. When drawing up your plans, don’t forget to factor in eco-conscious solutions for a building that’s designed for the future.
Upgrade your auction property’s insulation and ensure all windows are double or triple-glazed. Look into water conservation solutions, too, like low-flush toilets and rainwater collection tanks. Wherever possible, invest in sustainable materials, from second-hand metal to recycled composite fencing, and keep the carbon footprint of your build to a minimum.
Understand how to add value
If you’re renovating an auction property in order to flip it, every change you make should be focused on adding value. Ensure you do plenty of research into how different work can push up your property price, and ensure you don’t invest more than you’ll get back.
For example, a new kitchen can increase the price of your property by between 5-15% of its total value. If your bathrooms aren’t up to scratch, this is another area that can see a high return and should be a key focus.
Renovating an auction property isn’t a job for the fainthearted, but when done properly can be an utter joy. Just remember to consider your financial situation and have a clear plan in place for how you’re going to make a return on your investment.