Buy, reform and sell: Is it a good or bad investment?

09 January 2023

Buy, reform, and sell. Three words that, on many occasions, we can observe together when we talk about the real estate sector and that have become a trend for several years.

But is it profitable to buy, reform and sell houses? What are the advantages of making this type of investment?

In this article, we are going to answer these questions to solve all the doubts you may have when buying an apartment to renovate and sell.

Basic tips for buying apartments to reform and sell

A priori, the business seems simple: we buy an apartment or a house, we carry out a reform to revalue it and we sell it at a higher price, thus obtaining an economic benefit.

The problem is that buying cheap, reforming, and selling at a good price is not always as easy as it seems, since this type of operation can carry some risks.

For example, it is possible that the price of the house drops a lot, that the value of the apartment, once renovated, is less than what has been invested in the purchase and in the reform, or that it takes time to find a buyer and we must assume for longer than expected some expenses such as mortgages, taxes, or maintenance.

Even so, the formula “buy, reform and sell” almost always works if we are clear about what type of home to buy or how much money we can allocate to the reform.

Let’s see some basic recommendations to take into consideration when buying an apartment to reform and sell.

Choose the right property

An operation of these characteristics should not be done lightly and requires a prior study of the market.

Since your objective is to buy a home to reform and sell, you must look for areas with a high demand for real estate.

Look for residential areas or booming neighborhoods, with a high tourist attraction or with high prices.

These three aspects will make it easier to do a good business and obtain the desired results.

Likewise, future buyers will be willing to pay more for apartments that are well connected and located in safe or central neighborhoods that have leisure areas, parks, shops, services, etc.

To find a home that fits your aspirations, you can answer the following questions:

  • At what prices are the houses sold in the area?
  • What types of homes are more expensive, and which are in greater demand?
  • What is the current market situation?
  • How much money am I willing to invest in buying and reforming, before selling?

Negotiate a good purchase price

The general advice is to always trade the buy on the downside.

You can count on some advantage if the house is old or if it has been for sale for a long time, since both factors can make the seller more flexible when making an offer.

Get an affordable reform

The price of a reform can varies greatly depending on whether we want to renovate the bathroom and kitchen or paint the walls, or if we want a comprehensive reform with changes in the distribution to improve the space.

The materials and the quality of the finishes can also make the reform more or less expensive.

After a big reform, the apartment will revalue a lot. But you must be realistic and assess whether with the sale, we will recover the investment and obtain benefits.

Also, remember that during the time the reform lasts you will have to assume all taxes, fees, community expenses, supplies and financial costs.

Wait for the right time to sell.

Some indicators can guide us on the moments in which the price of housing is going to become more expensive.

The objective, especially in these cases, is to sell when the market is rising, and it is more favorable for us.

Until then, you can get a return on your investment by putting the house up for rent.

Buy to reform and sell: How long does it take to make a reform?

If you are interested in buying, renovating, and selling houses, answering this question will also be key, since time is as important as budget when planning this type of operation.

We cannot talk about minimum or maximum times, but a reform, generally, can take around three or four months to complete, although this time can be extended if there is a need to remove or make partitions, change the facilities, etc.

On the other hand, when planning the renovation of a house to sell, it is essential to pay attention to the areas that are in poorer condition or that we want to enhance, as well as choosing materials that add value to the property.

It is an investment that, in the long run, can give us many benefits. Reforming an apartment to sell can give us returns of more than 20% and if we combine it with rent and subsequent sale, we can further optimize the result if we get the timing of the investment right.

Before making the decision, we recommend:

1. Find a real estate agency with professionals who advise you on where to buy and when to sell.

2. Visit the property with an architect or a professional in the sector who can assess the state of the property you want to buy, renovate, and sell.

Buy, reform, and sell houses

At Monserrate, your premium real estate agency, we are experts in buying and selling flats and houses in the Valencian Community.

Are you evaluating the investment in a property?

The extensive experience and knowledge of our real estate advisors allows us to guide you throughout this process.

In addition, one of our premium services is Home Staging in Valencia. We take care of visiting your property and analyzing what its needs are to enhance its value and obtain benefits and profitability.

We encourage you to contact us, without any commitment, to carry out your real estate investment.

We will be happy to advise and help you!

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