Why smart investors should consider unmodernised for their next property

Unmodernised properties are gaining attention from smart investors as a financially savvy alternative to newly renovated homes. If you’re not convinced they’re a good purchase, this guide just might change your mind.

Cheaper Upfront Prices

It’s well-known that properties requiring a little TLC are cheaper than those with renovated interiors and up-to-date appliances.

This is true everywhere from Glasgow to Aberdeen and beyond, including investment areas outside of Scotland. In England, for instance, buy-to-let investors can save around 12% by choosing an unmodernised property, making this a clever move regardless of where you’re looking to buy.

Lower upfront prices come with a wide range of investment benefits. You can invest less money for the same size property, for instance, making your investment a lot less risky. If you prefer, you can spend the same amount of money but access larger spaces and homes in more in-demand locations for more lucrative assets.

Let’s say, for instance, your budget stretches to a one-bed modernised flat. By opting for a cheaper space that needs renovating, you might be able to access two or three-bedroom flats or detached properties with gardens.

Higher Potential Returns

Unmodernised properties have the potential for higher returns on investment (ROI). This is partly due to those lower upfront costs, but also because dated homes give you room to renovate.

Whether you’re redoing the kitchen or installing a brand new bathroom, you can add value through refurbishments that boost your property’s market value and rental appeal. A new kitchen, for instance, can drive your property selling price up by around 5-6%, giving you plenty of potential for financial growth. 

Crucially, here, you’re not just relying on the marketing to secure you a strong ROI. While property prices do typically have an upward trajectory, renovating an older property allows you to take matters into your own hands and create equity through smart home improvements.

Renovate Based on Demand

When you modernise a property, it gives you the control to cater to your target market.

As an investor, we highly recommend researching what current renters or home buyers are looking for in a property. Incorporate these high-demand features into your renovations to maximise your ROI and make your space easier to either let or sell. 

There are a number of ways to review target market demand. Start by analysing local listings on property portals to see which features appear most frequently in high-priced homes. Pay close attention to properties that let or sell quickly, and the standout features (like open-plan living or integrated appliances) that could be driving their demand.

Speaking to local estate agents is another effective approach. These teams have first-hand insight into what renters and buyers are actively asking for in your local area, as well as which upgrades genuinely add value.

You can also learn a lot by pinpointing the local demographic. If you’re by a school, for instance, you’re likely to see a large proportion of families with young children in the area. Use online studies and data to find out what they value in homes, including the ideal number of bedrooms, floor plan layouts, and appliances.

Maintain Heritage or Period Features

Across Scotland and wider Britain, we’re seeing a huge rise in the number of people who want older homes. Over 80% would rather purchase a period or heritage home than a new build, making older, unmodernised buildings a potential goldmine for investors.

By snapping up a cheaper, unrenovated period property, you can keep those distinctive features while modernising the appliances and improving structural foundations. Bring life back to old fireplaces, renew decorative cornices, and refresh original wooden floorboards for a property that’s likely to be in high demand.

Considerations Before Buying Unmodernised Properties

From ROI to selling quickly, there’s no doubt that unmodernised properties are a smart investment. But what do you need to know before diving into the market? Take a look at these key considerations to learn more.

Know Where to Find Unmodernised Properties

Scouring the property listings for homes in need of a renovation isn’t always an easy task. As an investor, every minute you spend hunting increases the labour costs of your investment, too, making it a smart move to improve the efficiency of your property search.

We recommend using property portals built by experts. A platform like PropertyData, for instance, allows you to search specifically for unmodernised properties in a postcode, highlighting only the homes that need work. This drastically reduces the number of listings you need to search through and makes it far easier to find a smart investment for your funds.

Do Financial Research into Renovations

Renovations aren’t always cheap. Make sure you’re factoring these expenses into your budget before you make a purchase, giving you a more realistic idea of how much you’ll be investing.

Start by creating a unique budget for every home you’re seriously interested in. Highlight all the renovations that obviously need carrying out, such as fitting a new kitchen or refreshing an old wooden floor, and use online research to price them.

Leave plenty of wiggle room for hidden costs down the line, too. A thorough survey will help you identify these before the purchase. We recommend an RICS Level 3 for the most in-depth report on the property’s condition. 

Always leave wiggle room for additional renovation expenses, too. This should be between 10-15% of your budget.

Understand Your Timelines

Renovations take time to plan, manage, and complete, and delays can impact your cash flow. Be realistic about how much time you can dedicate to the project to ensure it’s a wise investment.

Kitchen renovations, for instance, typically take around 4-6 weeks, depending on the extent of the project. A property extension, meanwhile, can take anywhere from a few months to over a year. For more accurate timelines, speak with professionals about the renovations you intend to carry out.

Once you have a better grasp on timelines, look at your finances. Can you wait that long before earning any income from the property? Factor in the average time it takes to sell or let similar properties in the area for a more precise idea of when you’ll start seeing returns.

Final Thoughts

Taking on an unmodernised property isn’t the easiest option for investors, but it’s certainly the smartest. If you want to create a home that’s in high demand while leaving room for significant gains on your upfront costs, this could be your next investment avenue to explore.

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