Key aspects you should know about the Refurbishment Model.

Key aspects you should know about the Refurbishment Model.

Refurbishing a property is all about taking a property, adding value through development and refurbishment, and then putting it back on the market or going through whichever exit strategy it is that you have chosen.

Why should you consider it?

On the one hand, this is a great entry level strategy. It is a great place for beginner property enthusiasts to start that will actually get you moving. The reason behind this is that refurbishing properties is not too technically complicated, it doesn’t take too much energy and you can create great effective results and get some extremely positive outcomes in a short space of time. This strategy can be quick to employ, and ultimately, it’s a model that enables you to have some thought around design and be more creative with what you want to achieve.

Although this strategy isn’t to technical, it will provide you with a good foundation of knowledge, it enables you to work with trades, it will help you understand who is responsible for what and what a work schedule might feel like. For example you will gain knowledge like at what stage you should do first fix electrical and when exactly you should do the plastering. Having this understanding at a simpler level is great as you begin to create a pool of knowledge that generally remains the same throughout all developments including the larger scale projects.

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On the other hand, it may be that you are more experienced and you are working on bigger projects such as commercial to residential style developments or the new build style properties. The one issue with these kind of strategies is that they can often take much longer to complete which therefore means you are without cash flow for a longer period of time. The refurbishment model is great for getting cash flow on the side of working with larger scale projects.

Therefore, this strategy is great for both beginners and those who want to create cash flow whilst working with large scale development projects. This is something that my company, Dapatchi Group have done because not only does it allow for a quick turnaround and cash flow, but it means you are adding value to local communities.

I feel that refurbishment models are so important for property professionals to have as part of their strategy as they ultimately help to bring life back into rundown buildings and communities and through refurbishing these older properties you help provide homes for people that need them.

When it comes to the refurbishment strategy, everybody involved in property should be aware of it as it sits alongside every other strategy. No matter what strategy that you have chosen, if you understand the fundamentals to refurbishing a property your overall approach will give better results. It will help ensure your projects are well lit, spacious and well sought after.

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Where should you refurbish?

When it comes down to the aspect of where you should be getting properties to refurbish them, there are opportunities everywhere! On every street in England there is a property that needs some love and attention to create the perfect home for someone in that community.

Therefore, when it comes to deal sourcing, it should not be too difficult for this strategy because you are just looking for ran down properties that you have the ability to add value too. The opportunity is everywhere so long as you engage into this space.

Something to mention is that you still need to ensure that you do your due diligence and ensure that the deals work, but for this approach geography shouldn't be a limitation!

When should you refurbish a property?

This strategy is all about adding value to a property and it can generally be done at any given time. However there is something to be aware of when refurbishing a property. You will not be adding hundreds and thousands of pounds unless you are working in very affluent areas which ultimately means that the margins will be smaller, therefore you do need to be a little bit cautious and aware of what is happening in the market. For example, if you buy a property in January and then come to sell it in July, but the market has actually taken a huge downturn since January then potentially the value that you have added, could be lost by the economic changes. So, as with all property strategies you need to be aware of what's going on in the wider economy. A great time to begin a refurbishment is when you can start to see properties to jump up slightly because not only do you add value by the refurbishing them but by the time you have finished it you could have gained some value in growth.

The biggest thing that you should be considering throughout not only this strategy but through every property strategy is the exit. For example, once you have finished the current house you are working on, who is going to buy it, who is going to rent it and who is going to ultimately want this space? As long as you can always answer this question then you will be keeping yourself relatively safe within the property space.

The key takeaway from this blog post is that if you are involved with any sort of property, then you should be involved or at least aware of refurbishing properties.

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