Top Tips for Flipping Renovated Property in Hong Kong

Hong Kong - renovating property

Home renovations are one of the cheapest and the best way to modernize any real estate property. Additionally, renovating homes is not only a sure way for breathing a new life to you real estate property but increases the lifespan of the property. You also need to note that most renovations are usually personalized according to the specific tastes and preferences of a person as well as per the modern trends. This helps to add an aesthetic appeal to the property.

Renovating can be done to a portion of the property or even the whole property. Whichever the case, the primary motivation should be to increase the quality of the home which consequently increases its worth. However, the approach of renovating homes may differ in different situations hence dictating the amount that a homeowner is willing to invest in the renovations. If you own a home that you seek to modernize by renovating, you may be willing to spend huge sums of money in the renovations without blinking an eye. Yet, if you are an investor who seeks to buy property, renovate it to add value and then sell the same property at a profit; you definitely must have a clear plan for the renovations that should go to the property. Essentially, you want to maximize returns while at the same time you have the task of making the property compelling so as to attract potential buyers.  The renovations that you undertake should be similar to the commercial that we see on TVs. They should be attractive and lure enough for potential buyers. Yet, the costs involved in modernizing homes can be exorbitant in some instances. As an investor, you should know how to strike a balance in your endeavors. It's like the classical gambling secret when playing poker as Kenny Rodgers sang it- the secret to surviving is knowing what to throw away and knowing what to keep.

When you are renovating property with the intentions of flipping it for a profit, you need to know what needs renovation and what doesn't. You shouldn't go renovating the entire house if it is only the bathroom that needs renovation. Additionally, there is the property whose costs of renovations can amount to almost the same cost of building a new home. Such property is a no-go zone and you should never think of purchasing them with the intention of renovating and flipping them at a profit. Such a move can rebound and have devastating effects on your investment. Always remember that real estate investment in Hong Kong requires the huge amount of money and you don't want to stick your money in a property that will take ages before you could recoup the money. In the worst case scenario, you may even end up flipping the promptly at a loss. You definitely don't want to go down that path.

With that said, the primary reason of appraising property is to increase its value. Careful planning and thought before renovating enable the property to have substantial equity. Most investors know this fact and they utilize it to maximize the value of a home before flipping it. Renovating helps investors to have an advantage of adding a markup to the property because it has already been modernized. When the economy is healthy, selling a renovated home can attract good return. The converse is also true; during tough economic times, a renovated property may still not fetch the best process in the market.

If you are a first-time investor who seeks to invest in renovating homes before flipping in Hong Kong you need to be aware of the benefits or consequences that you will reap from purchasing and renovating a property before you can flip it. You need to consider various factors before you purchase or renovate a home with the intention of selling it. They include:

Costs of Renovations

Like we have already said the costs that you incur when renovating property is relative to the returns that you will earn after flipping the property. Therefore, the first point before you buy a property is to consider the cost that will be incurred for any cosmetics changes that you will make. You need to ascertain the costs of the renovations with regards to the ultimate value of the property.

The final value of the property should be related to the overall prices of properties in any city/ town or an estate in a town on Hong Kong. There are many instances when a property, however how desirable and beautiful it may seem after renovations, will not attract a higher price above the normal market prices in a given regions. Therefore the cost of renovations should be well estimated with regards to the market prices of similar properties in any region
Never over-renovate your property with the intention of selling it at a higher price as a thumb rule always ensure that your renovations are optimal and do not make the property to exceed the market value of common properties in a given location because this may make it difficult for you to find a buyer.

On the other hand, try to avoid purchasing a property with the intentions of renovating if you do not have a substantial amount of money that will cover all the costs and expenses involved.  You must have a realistic budget which you must stick to during the whole process. This ensures that you do not ignore remodeling any part of the property that really needs renovating.

Price of the Property

Any property that you intend to buy for reselling should be fairly cheap if it needs repurposing. Weirdly, the costs of repurposing homes can go overboard the estimated budget. The main secret here is to narrow down to a property that is structurally sound. If you are inexperienced in estimating the worth of a property, it is highly advisable that you seek professional services of property valuers. There are many valuers in Hong Kong who will help you in estimating the best estimate value of the most property. Basically, values appraise property based on it structural strength and any structural deficiencies that need rebuilding.

When searching for a property valuer, it is a best practice to seek advice from other investors on the most reliable professional whom you can trust and will enable you to estimate the best value of a property. Most realtors in Hong Kong know will be willing to refer you to a reliable valuer. You can also find valuer online through websites such as Trulia and Zillow. When searching for a property valuer online, you could use positive reviews to make a judgment if a valuer is desirable or not. One way to ascertain that is by contacting two or three clients who received services from the value and left a positive review.  Contacting them can help you determine what to expect from the valuer.

All in all, you should always bear in mind that most properties that require major structural renovations are never up to standard. This leaves any investor with the option of repurposing the home to meet the market standards. In such cases, the renovation needed would require more money hence making the total price invested in the property to soar up. This cuts into the expected returns upon selling the property.

The best move for buying such a property is to ensure that it is cheap and the renovations needed are not costly. Always begin negotiations to acquire the property by bidding low citing the structural weaknesses of the building. You could also deploy the services of realtors to enable you to seal a deal by purchasing a house cheaply. Most Hong Kong realtors are usually aware of the structural weaknesses of most property within their area of operations and can caution you before you make a regrettable move.

Length of Holding the Property

The prices of real estate property appreciate with time. Therefore, if you are not looking for a quick fix, you can reap good benefits for holding the home. On the contrary, if you are looking for a quick fix whereby you want to buy property, renovate it and then sell it at a higher price, then you are bound to make wrong choices. Unless the economy is really doing well, then be patient when investing in any real estate property. The advantage of holding a property until it becomes matures for sale is that it increases it equity value which in turn gives you the advantage of being at a better position to obtain more credit which could be used for investing in other property hence diversifying your portfolio.

Since you intend to purchase a property cheap, add value by remodeling it and then selling for a profit, you should seek to invest an amount that you are willing to wait for a while before recouping. In essence, the location of the real estate market where you invest should have positive signs of future growth. You will have to estimate this value in relation to the forecasts of your returns after purchasing the property, renovating it and holding it for some time.

Investing in Economically Thriving markets

The location of a property plays an important role in determining the profitability of a real estate property in Hong Kong. There are several factors that make a location desirable and they are all supported by a location whose economy is doing well.  You need to take your time and research on areas that people would love to live.  A good location will be well endowed with other auxiliary services such as good schools, hospitals, and other amenities. Additionally, the location should have high employment rates, minimal security threats, and good infrastructure just to mention a few. These locations are quite promising and offer many opportunities for growth. Therefore, purchasing a property in the location can yield to substantial equity after renovating and consequently better returns upon flipping later.

The Real estate industry in most parts of Hong Kong has been booming in the recent times because of the thriving economies. Many township areas and city have been growing rapidly in the recent year and thus offer immense potential for investment. It is important for you to do your homework well and determine the best region to invest. Always remember that thriving markets means that the prospect of finding a potential buyer to purchase the property after renovations are quite high. Play those cards to your advantage.

On the contrary be wary of investing in stagnated markets where you could come to be haunted later by your investment if spent a fortune on renovation only to lack a ready market for sale. Or having to contend with the fact that you can only sell your investment at unfavorable prices

Consider DIY Renovations

If you are really looking forward to reducing your costs of renovating the property hence incurring fewer expenses then you should aim for DIY renovations. Generally, renovations are expensive and involve a lot of money. You could save on the expenses by trying DIY renovations.

However, if you are a beginner / inexperienced in renovating a property in order to flip, you will still have to incur huge costs of contracting structural builders and other traders for the renovations. That is the reason that you should start with the structurally sound property. However, even if you still have to contract external professionals to rebuild the property you could save cost by engaging in smaller cosmetic changes such as gardening or painting.

When you have gained more experienced and you have become seasoned in renovating the property to flip, you should consider setting up your own business for taking care of the renovations. This will help you reduce more expenses in the long run. You can contract the services of your company to other investors who seek professionals for the remodeling purposes. You will be killing two birds with a single stone.

Renovate the Focal Point of the Home

Essentially, potential buyers pay much attention to the focal point of a home before making a decision to buy the property. The focal point includes areas of high traffic that are prone to weathering with time such as the bathroom or kitchen. It is essential for you to reduce your renovating costs by making custom adjustments to the focal point of the property only unless, their property is in a bad condition that will require different rooms to be renovated.

There are instances when a property will require some additions to increase its viability. Such additions are also favorable on the focal points of the home. For instance, you may decide to modernize the kitchen with an open plan kitchen model of you may expand the living room by adding a patio. Whatever you choose to add such be cost effective and increase the suitability of the property

Know which Improvements Add Value

When remodeling a home, it is important to factor in the value that you are adding to the property. You should always remember that the value of the property is a primary determinant of the ultimate price.

However, not all renovations add any value. For instance, wall-to-wall carpeting, extensive landscaping or installing a swimming pool may not necessarily add value to the home. These are renovations that tend to be overlooked by potential buyers. Moreover, invisible renovations such as installing a modern plumbing system, using high-end upgrades or modernizing the property by replacing the air conditioning system with a new HVAC system may not add value to the home. It is also important to make sure that you never renovate your property with any value that exceeds properties in the neighborhood.

On the other hands, there are renovations that add value to a home. For instance, remodeling the flooring or remodeling the bathroom. Your efforts should be concentrated on these renovations since potential will consider their status first when making a preliminary investigation to the property.

Learn the Essentials of Home Design

Remodeling a home does not only pertain to making structural changes but other cosmetic alterations that make the property appealing. Having knowledge of creating impressive home décor and stylish designs is a sure way of turning a boring dungeon into an impressive sanctuary that can attract potential buyers faster.
You should have the basics of styling homes by decluttering rooms, upgrading fittings, using décor accessories and artwork as well as sourcing modern furniture that features unique designs.

Stylish home designs add boost the curb appeal of the property which can help in attracting potential buyers. Additionally, during the period that you will be holding the property prior to making a sale, always ensure that you keep the property elegant and appealing. Never neglect a property even if you have decided to hold it for a certain period before making a sale. There are chances that a buyer may find it attractive and offer a good price earlier that you anticipated just because the property was appealing to them.

Final Word

Remodeling, renovations and any additions of a property should be done to increase the property value. It is never advisable to make unnecessary renovations that are costly but end up not adding any value to the property. Before making any renovation plans, you need to research on the necessary areas that need adjustments and determine the favorable renovations that are needed in those areas. You should use the costs of renovation the property as a primary consideration of the perfect renovations that are cost effective yet add value.

You need to have a clear budget and ensure that you stick to the budget so that the costs of renovations do not skyrocket more than you intended. Additionally, it is important to seek the services of professionals in appraising the property value and determine the renovations that are ideal for the property.

In the event, that you may seek financing to renovate the property, it is critical to ensure that the finances are not used in any other way other than making the renovations. An important point to note is that you need to know your financing options and the overall equity of the home after renovations. If the equity is low, you may obtain financing at higher rates and still sell the property at a low price hence which eventually lowers your return on investment considerably.

What are some of your top tips for flipping renovated properties? What are some of your experiences with this part of the real estate industry? We would love to hear your comments!

Engel & Völkers

Hong Kong, Real Estate Agency
Shop A, Ground Floor, 95 Caine Road, Mid Levels
- Hong Kong
Company License: C-035745
Phone
+852 2561 3616

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