One of the Best Options to Improve Profitability is Housing Renovation.
It is important to outperform the competition with suitable qualities and finishes. An efficient and trouble-free operation is achieved after adapting the home by improving its distribution and decoration, among other aspects. By standing out from other homes, more customers at better prices are guaranteed.
“Completed and decorated homes in operation are expensive and it is difficult to obtain a better purchase price for them. It is not a theory, the press confirms it, year after year, investors focus on the added value of the flats to be renovated,” Leon Taurel, CEO of Alimbles.
Buy to renovate
The key is knowing the neighbourhoods with affordable prices and rental demand. For example, neighbourhoods within the M-30 have high prices, however they offer more security, the ones bordering the M-30 often have a purely residential destination.
A high percentage of those interested in buying a home look for options which require a complete renovation. It is the best way to guarantee quality, modernity, easy access to the market, absence of defects, and a period of more than 20 years without incidents in the home is to change everything.
It is convenient to know the price structure of Madrid:
- Investments over 150,000 euros should focus on specific and simple neighbourhoods within the M30 and make capital out of housing for students.
- An investment of 300,000 euros or more extends the options to the entire city, depending on the size and location of the home. In Madrid we speak about costs between €4,000/m2 and up to €15,000/m2 and never less than €1,500/m2.
- If the investment is over 400,000 euros, you can access to a medium or high range of flats with one room or more in good residential neighbourhoods, which open the market of accommodation for companies or for executives.
- Luxury, however, has no limit and it is above €10,000/m2.
Cost of investing in a Renovation
The cost of a renovation requires an investment that ranges between €400/m2 and €1,200/m2, usually €800/m2, depending on the condition of the home. In complex cases, demolition may even be required and, in those cases, you could even be required to build or hire a parking space, other cases may require sanitation of the sewage system or roofs.
The return of the cost of the renovation can be immediate since the houses already renovated have an easy exit in the market and an interesting rental price. Its price is positioned above non-renovated homes. The key is to buy at a good price, which is easier in a home to be renovated than in a recently completed one.
When carrying out a purchase or renovation, financing property adquisition is normally used. But to reduce the risks that caused the 2008 crisis, it is best not to finance more than 70%. A prudent measure is to calculate if, with a 20% drop in rental prices, you could continue paying the resulting mortgage payment and thus not have to invest more capital.
Reformists and architects used by DFLAT
Investing in renovation involves an additional cost that depends on the qualities and on whether it is an adaptation or a complete work.
If it is an adaptation, it is advisable to allocate a budget of €300/m2. If it is a complete work, you can assume €1,000/m2. Most renovations range between €600m2 and €800/m2, VAT apart.
More information for investors in Real Estate
We commercialize our stock through B2C, B2B channels, moving companies, relocations, travel agenciesn and our own particular channels with apartment listings for companies and students. We have apartments by days next to the Castellana street, behind the Intercontinental Hotel and near the Miguel Angel Hotel.