Profitably renovating an old home means buying at the right price, inspecting thoroughly, budgeting with a contingency, fixing major systems first, focusing on high-ROI updates like kitchens and baths, and hiring the right contractor. Overspending and skipping inspections are the common pitfalls. Here are 9 steps to renovate an old home profitably, with the right contractor.
Renovating an old home is your chance to flip a property. Flipping is an extremely lucrative investment option. The idea is simply too novel to fail. You buy an older and worn-out property at a below-average price, beat it into good shape with a couple of carefully selected upgrades, and, finally, sell it to turn a healthy profit. This practice can, on average, produce a return on investment that goes all the way up to 26.9%.
However, we would like to point out that all the good things we have mentioned above come with a couple of asterisks. Not every property is worth renovating. Second, flipping a house is a business venture and it needs to turn a profit. You can only do that by limiting your efforts to upgrades that maximize sales potential.
Let’s take a look at a couple of the steps that will allow you to select a profitable property and turn it into a market goldmine.
Here at GreatBuildz, a free service that connects homeowners in Los Angeles, Ventura, and Orange County with reliable residential contractors, we speak to homeowners every day about planning for a residential renovation – here are some considerations, ideas, and tips to get you started.
What are the Benefits of Renovating an Old Home?
Renovating an old home offers numerous benefits, including preserving historical and architectural value, increasing property value, improving energy efficiency, and contributing to environmental sustainability. It allows for the customization of living spaces with modern amenities while fostering community pride and potentially accessing financial incentives. Whether for personal satisfaction, financial gain, or environmental responsibility, the benefits of renovating an old home are substantial and multifaceted.
Pick the Right Property
Well, let us start with the essentials. If you hope to increase home resale value, you need to have something worthwhile to begin with. So take into consideration factors like neighborhood location, current state of the market, size of the property, as well as its age, condition, and layout. If these things do add up to something you can call profit, feel free to invest money into the areas that will make the property pop even more. However, if you are operating in a dead market or the house is simply too shabby to begin with, no investments you make will be able to make it profitable enough.
Hire Help or Do It Yourself
When renovating an old home, both of these approaches are perfectly viable. You only need to go through your skillset and decide which upgrades are within your reach and which should be left to professionals. When it comes to the real estate market, you really have no room for trial and error. It takes too much time and eventually drains your resources. So, if the only thing you can pull off is a simple paint job, feel free to do so. It will save you a couple of bucks. But, whatever you are not sure about, leave it to the pros. They will perform the upgrades with due speed and efficiency, and produce a much more reliable output.
Don’t Get Too Carried Away
Once again, we need to remind you that you are engaging in a business venture. That means you need to be cold and calculated. In other words, focus on the elements that turn profit and leave the interior design and other small touches to the future occupants. Getting too carried away and trying to put together an ideal home can only waste your time and money. So, be sure to plow through the essentials we will cover just below first. If you, by any chance, have some money to spare and time to invest, you can play with a couple of cosmetic touches and tweaks that will improve future staging.
Overhaul the Kitchen
Now, let’s get to the meat of the problem. When looking to buy a property, the kitchen is one of the first rooms on the radar of any future occupants. So, if you want to make some splash, this is the room to go big. Where to start with the upgrades? Well, in this case, you need to read the market. Checking the popular rentals will give you a good idea about what people are looking for. Feel free, then, to check some of the popular rentals. For example, checking cheap apartments in San Jose or Los Angeles will give you an excellent idea about what’s popular on the West Coast. The same goes for other markets as well.
Build a Small Home Office
When renovating an old home, we need to remember that we are living in a digital age and that the current labor market swings heavily in the telecommuting and remote work direction. Keeping that in mind, you will be able to get massive market traction and easily differentiate your investment from other similar properties by repurposing one of the rooms at your disposal into a small home office. The great thing is that doing so doesn’t entail any specific requirements. The room only needs to be well-lit and feature enough space for a work desk and enough storage units, as well as a decent level of sound isolation.
Add Isolation and Window Treatments
In this day and age, the real estate market is dominated by the ideas of sustainability. That is perfectly reasonable. Energy prices are currently surging, and buyers will want their future homes to be sustainable in the long run. Therefore, we need to consider isolation and window treatments among the highest-value renovation projects at our disposal. According to recent surveys, adding proper insulation can reduce heating and cooling expenses by up to 40%. Similar results can be achieved by installing double-glazed windows or adding window treatments. These upgrades are more than worthwhile if you want to make a profit out of renovating an old home.
Upgrade the Garage
This may sound like a slightly bizarre choice. But, we need to keep in mind that the garage is more than the room where you keep your car. It’s also everyone’s favorite workshop, a place to store your tools and spare items, and pretty much anything you want it to be. Well, try putting some money here – it will most probably pay off. Even something as simple as replacing the garage doors will instantly make the property look tidier and well-maintained. You will also improve the curb appeal and earn some easy points from the get-go. As you can see, this investment has a pretty good rationale behind it.
Small Touches Throughout
Here, we can count all the small upgrades that, by themselves, don’t make such a drastic change. But, when you do put all these things together, they can completely change how some property looks and feels. What are these small touches you can so effectively use to your advantage? Well, here are some of the most notable examples that can make or break renovating an old home:
- Faucets and door handles
- Lighting fixtures
- Interior and exterior paint
- Tiles and floors
- Fixing wall and ceiling cracks
- Basic landscaping works
- Front door makeover
- Programmable heating systems
- More storage options
The more things you manage to check off this list the higher the chances your investment will register on the mainstream radar.
Add an Additional room
When talking about reselling a house, people like to say that each and every property has some ceiling value you simply can’t break through no matter how much money you pump into it. Well, that is not entirely true. A one-bedroom house is not the same as a two-bedroom house. The same train of thought applies to pretty much any high-value room. Therefore, if you have enough room in the yard, why not simply expand your investment with one or more additional rooms? Sure, you will need to invest a hefty sum in this project, but you will also dramatically change the house’s market outlook.
Wrapping-up
We hope these nine suggestions will help you make your future investment profitable. Of course, this is only a very selected list that should put your venture on a solid foundation and help your property stand out from the competition. How your renovation list will ultimately look will largely depend on the market circumstances and the property you end up buying. But, even this short list should push you in the right direction oif you’re renovating an old home. You will be able to figure out the rest as soon as the work starts rolling.
Frequently Asked Questions
How do I renovate an old home for profit?
Buy at the right price, get thorough inspections, and budget with a contingency for surprises. Fix major systems, foundation, roof, electrical, and plumbing, first, then focus spending on high-ROI updates like kitchens, bathrooms, and curb appeal. Avoid over-improving beyond the neighborhood, and hire a reliable contractor.
What adds the most value when renovating an old home?
Kitchens and bathrooms add the most value, followed by flooring, fresh paint, and curb appeal. Sound major systems protect the investment even if they don’t show. The goal is to add more value than you spend, so prioritize updates buyers notice and safety requires.
Is renovating an old home worth it?
It can be very profitable if you buy right, budget realistically, and control costs. Old homes often hide expensive surprises like outdated wiring, foundation issues, or lead and asbestos, so inspections and a contingency are essential. Done well, the equity gain can be substantial.
When it comes to planning and coordinating a residential renovation, you shouldn’t have to go it alone – GreatBuildz can help simplify your renovation experience. GreatBuildz is a free service that connects homeowners in Los Angeles, Orange County, Ventura or San Diego with reliable, thoroughly screened general contractors and provides project support from start to finish.
