As investors, we are looking to get the most returns from our properties.
This means that we would also be looking to minimise the capital required to create the maximum amount of uplift. Here is where the reconfiguration process really comes into its own. Whether you are talking about entry level 1-bedroom flats, or large conversions, the principles remain the same.
The majority of people think that the reconfiguration process is an overly complicated and expensive strategy, but this is not the case.
Most of the properties we buy will require some sort of refurbishment, and most times, this will be in the form of a back to brick refurbishment.
Now, once the property has gone through the rip-out stage, typically any works required to carry out a reconfiguration will not have a major impact on your projected costs or extend the programme of works (as long as it was planned ahead of time of course).
But the real magic here is the increase in potential End Value (GDV) achieved. Typically, When it comes to 1 bed flats, you can expect a 10-15% uplift in the properties potential end value from what was already calculated by adding a bedroom space.
This also works for other properties, with varying differences. I.e Studio > 1 bedroom flats, 1>2 bed flats, 2>3 bed flats, 3>4 bedroom houses... The same principles are even being used convert commercial units into blocks of apartments.
This is not a new strategy, developers have been doing this for years, but understanding this principle will open your eyes to more deals.
I hope this helps.
If you want more information on this strategy, feel free to download my guide to The Art of Reconfigurations. Its Free.
All the best,
Alex
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