The housing market offers opportunities for all those who know how to see them and have the necessary capital to invest. A trend that is gaining followers is to buy houses to reform them and then sell them, and thus make a profit. In this article, we cover what to consider before launching into this niche.
Reform to sell: what the business consists of
The business is very simple, initially: buy, reform and sell for a higher price to the value of the home and its reform (and also the expenses derived from the operation and maintenance). In practice it seems very simple, however, to be profitable, you must know a series of basic aspects. Otherwise, what started out as a brilliant idea can turn into a real headache.
To invest in a home, you must have some previous savings that contemplate the purchase of the house and its reform, as well as all possible extra expenses that may arise. If all goes well, it is estimated that up to 30% profitability with this type of operation.
most frequent is to buy old houses and flats, even if it is in poor condition, but whose reform is not very expensive. To do this, the damage must affect the visual part, let’s say, but not its structure.
Renata She is one of these individuals who buys houses, reforms them and sells them. It takes more than 10 years developing this type of activity on the Costa del Sol. “You have to be very aware of the houses for sale because more and more investors, large or small, are interested in this business,” comment to idealista/news.
“Homes in good locations or in a state that is not excessively dilapidated, fly. For example, Last year, a town house in the center of San Pedro Alcántara, next to Marbella, went on sale for 90,000 euros, almost in ruins, with the interior destroyed, without light and a horrible appearance. Five people went to see it. On that same visit, he sold. And it was scary to go in, ”he explains.
When We ask him why this quick sale of a property that, at first glance, may seem expensive with these conditions. And he answers: “For the possibilities. The house had three floors, in the center of San Pedro, 10-15 minutes from Marbella. It is a very good opportunity to build tourist apartments or a vacation home, for example. Although, I backed down due to the high cost of the renovation. But that house, once renovated, could be sold for about 250,000 euros”.
Buying an apartment to reform: what must be taken into account?
The most important, is to assess the cost of the purchase and reform and analyze the possibilities offered. The most relevant aspects to take into account are:
- The state of the property. The worse it is, the greater investment will have to be allocated to reform it. For it, The ideal is to visit the house with an architect or reform professional who knows how to appreciate what real state it is in.
- The purchase price. In order for it to be profitable to buy a renovated apartment and sell it, it must be at a price below the market.
- Estimate the cost of the reform. You must anticipate the money that it will mean to leave the apartment in good condition, that is, salable. For example, you have to know if you have faults in the electrical or water system, in the structure, humidity, etc. It is essential not only to look at the appearance of the house, but everything that may be broken below it. Once you think that you are going to buy it, you should ask for budgets and assess if it is really profitable.
- Analyze the market. An operation of this type requires a prior study of the market. How much do houses sell for in that area? What types are the most expensive? And the most demanded? What type of client am I looking for? Is the house price going up or down? All these questions are important. For it, you can let yourself be advised by real estate agents in the areasince they will know how the market behaves in that area and will help you find a product that fits your aspirations.
- Geographic area. Much of the success of the operation lies in choosing a home in a demanded area. Booming areas, high tourist attractions or with high prices They are always safe bets for this business. It is always valued more that the house is well connected, that the neighborhood is attractive, that it has leisure areas and services, etc.
- Maintenance and expenses. During the reform process, it must be taken into account that the house generates some expenses. Capital must be available to deal with them. For example, the garbage rate, the IBI, the fees of the community of neighbors, etc.
“My first operation was a disaster. I bought a town house in Tolox (Málaga) for 8,000 euros. I thought it was very difficult not to get something out of it. In the end, the reform cost me 40,000 euros and I did not leave it as I wanted. I ran out of money and ended up selling it for 47,000 euros in total, including expenses and taxes. I got little, very little, for the time it took me”, comments Renata.
Now, with more experience, this Polish woman living on the Costa del Sol, performs two to four operations a year, obtaining a high income, that you prefer not to disclose.
“Es better invest more money in something safe to buy what at first glance seems like a bargain. Over the years, you learn to appreciate things about the state of a home that can shed some light on the cost of reforming it, but it is always advisable to go with an architect for visits. In this way, it will be able to clarify what possibilities it has and what expenses the house needs ”, he adds.
Buy cheap houses to reform and sell
Looking for a cheap apartment to reform it and then sell it? In idealistic You can find more than 30,000 houses to reform from 20,000 euros.
