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Part of sourcing your property involves running a cost analysis. You have to look at the improvements the property needs versus the potential profit you can generate from it.
There are 3 steps you need to take to do this:
Step #1
Discover the median price of equivalent properties in the area. Visit as many of these properties as possible then visit the fully renovated properties to find out about any improvements the owners have made.
Step #2
Run the figures on the property you want to buy. Can you make those upgrades while still coming in under budget?
You have to factor in a time cost and if your renovation is extensive enough to need council approval.
Step #3
The cost of the improvements aren’t the only costs to consider. You also have to add your buying and holding costs into the equation.
As mentioned above, needing council approval can add time to the renovation. That means your holding costs go up, however as your first home – this cost is offset as you are living there and saving on rent elsewhere!
Remember only if the numbers still make sense, the property has the potential to turn a profit.
Check out the Investors Choice Mortgages Hub for resources and tools that help you on your property journey.
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