For those of you with the extra liquid and looking for a long term investment that pays off, getting into the secondary property redevelopment may be the way to go. This type of business may sound high end but in actuality, it is simply buying homes or residential units, refurbishing or renovating them, and then selling them at a profit. It seems a contrarian business to do but if you think about it, with the property market still down, there are lots of homes for sale at bargain prices which you can buy from banks and you can get best quotes from contractors to renovate the property and fixtures. Here are some of the things you should know before venturing into this business:
– Be very liquid. This means that you may need a lot of cash in doing such business. This is a business that takes a long term view in doing this especially if you are doing this full time. You can also doing this by leveraging your property as collateral for soft loans from banks but this has to be done with conservative movements. These days, many banks are wary of lending to leverage homes so the option is to use conservative estimates and if you decide to go this route, you have additional pressure to sell the home right away.
– Purchase property at low prices. You should be able to purchase property prices at a low price. Whatever the bank is offering to sell, haggle at least 50% off the named price. From that point, it is a negotiator game and be prepared to walk away from the deal even if it sounds sweet. You should meet almost halfway or about 30% of the asking price.
– Source out the materials if refurbishing. You don’t necessarily need the name brands when you renovate. For example, go and get door knobs from a discount door knobs store. Also, when buying bulk prices, make sure you get the contractors rate which should be at least 20% off the listed price. You can also go online and pre-order items from discount door knobs website. It makes life easier for you to do that.
– Negotiate with subcontractors for renovations. You should be able to negotiate with the subcontractors to do renovations. You can also provide the necessary materials for the job that needs to be done. Also, ensure that any changes in the plan must be documented and that if negotiating for the labour side of the subcontractors, estimate the days work needed to complete the task and you have the final inspection before signing off. Knowing that you are on top of things will make the contractors do their job well.