Refurbishing a Tenerife Property for investment

Many potential buyers consider refurbishment of a Tenerife property as a strategy for investment. As with reviewing any investment proposal, you need to take a cold, logical look at it.  The first thing to do is to assess, at today's prices, what the resale value would be after the changes that you propose.  The most common mistake made by people is that after a substantial investment, they may have increased the desirability of the property, but not the actual value.  For example, the south of Tenerife is full of apartments, many of which are on complexes that are showing their age.  However much you spend on an apartment in one of these, there is still going to be a ceiling on the resale price, simply because the environment is still tatty.

So, you have looked at what equivalent properties are selling for and have made an educated estimate about its valuation after refurbishment.  Now you have a few more questions to answer before you go any further.  How much will it cost?  How long will it take?  When will it be habitable?  Will it require planning permission?  How long will it take to sell?

Obviously the cost is important.  Bear in mind, that while you are paying for the improvements, you may have to pay for a mortgage and this may slow down your progress.  If you are borrowing the money, you will have to add the cost of borrowing to your 'costs' column.  If you are using contractors, get several quotes.  If you are doing it yourself, bear in mind that building techniques may be different from those you are used to.  There are not many timber framed and brick built houses with slate roofs in Tenerife, plumbing does not use copper piping, and electricity here is often more accurately described as 'electrickery'.

The time it takes is crucial.  The longer it takes to refurbish, the higher the costs will be.  Bear in mind that, unless you are resident here, it will be almost impossible to control the process from the UK with an occasional visit.  It takes time to research suppliers and contractors and the project will need supervision.

If it is not immediately habitable, then you will not be making any rental saving or income.  From an investment point of view, this is crucial to your 'money in' column.  If it will take a year before it can be lived in or rented, then that's lost income.

Planning permissions can be a nightmare, especially when refurbishing an old finca out of town.  That decrepit wall that you are aiming to knock down may well be protected.  Ensure that you, or your lawyer, conduct the appropriate searches before the purchase.

If all the above sounds a lot of work, it is.  As with all investment, research and preparation is the key.  If, when you have added and subtracted, you still think the proposal is viable, then go for it.  It is potentially a very lucrative method of investment for those who are willing to spend the time, effort and money.