Most people who try property renovation make considerably less than they expected. Some make very little. Some make nothing. A few actually lose money. And in most cases it’s not because they worked on the wrong property, or got unlucky with the market. It’s because they didn’t understand the actual model — the specific thing that separates renovation projects that make real money from renovation projects that don’t.
Let me explain what that is. And more importantly, let me explain the things that go wrong when people misunderstand it.
It’s not about doing it up — it’s about doing it up in the right way
Here’s the thing that sounds simple but really isn’t: it’s not about doing a property up. It’s about doing it up in the right way, for the right market. Those are two very different things, and confusing them is where a lot of money gets wasted.
The question you need to answer before you spend a penny on the renovation is: what does the market in this area actually want this property to be? Because if you do things to a property that the market doesn’t value, you may or may not make money from it, and you’ll have no reliable way of knowing in advance which it’s going to be.
Take the rental market. Local tenants have a pretty clear idea of the specification of property they want to rent, and they know what they’ll pay for it. What they won’t do is pay a higher rent for something they didn’t ask for and don’t particularly need. You can put in underfloor heating, or a home office setup, or a top-of-the-range kitchen — and if none of that was on their list, it’s not going to move the rent. They may be very happy to get it as part of the package, but they’re not going to pay an extra few hundred pounds a month for a facility that wasn’t what they were looking for in the first place. The easiest way to find out what local tenants actually want, and what they’ll pay for it, is to talk to the local letting agents. They’re the ones who hear it every day.
The same logic applies to flips. My strong view — based on many years of watching what works and what doesn’t — is that the best properties to flip are at the more affordable end of the market. First-time buyer properties, or cheaper second-time buyer properties. Why? Because the pool of people who can afford a more expensive property is far smaller than the pool who can afford a cheaper one. And with stamp duty making the top end harder to stack the numbers, expensive flips have got considerably more difficult. What you’re looking for is an owner-occupier area, where properties are affordable to the biggest segment of the market — which means you can sell more quickly, rather than waiting a long time for the right buyer to come along.
In both cases — rental or flip — the principle is the same. The end user decides the specification. Not you.
Buying at the right price
None of that works unless the property is bought at the right price. And this is where a lot of renovation projects go wrong, right at the very start, before the work has even begun.
I moved into property renovation in 1995, after being made redundant, thinking it might be a way of replacing my income. And one of the things I learned — partly from my own experience, and partly from watching other people — is that it is not always easy to find a property at the right price where the figures genuinely stack. It can realistically take several months of looking, not several weekends. And when investors don’t find deals as quickly as they expected, some of them get desperate, or over-enthusiastic, and they start to compromise.
The auction market is a good example. Not every property at auction is cheap, and the excitement of competitive bidding can lead people to pay far more than they should. In the early 2000s, I saw properties selling at auction — unimproved — for more than the improved version would have achieved on the open market. Those buyers were looking at a guaranteed loss before the builders had even arrived.
The principle holds wherever you’re buying. The price is where it’s won or lost. Once you know the price works — once you’ve verified your refurbishment budget, and you’re clear on what the end value is going to be, whether you’re selling or refinancing — then you can carry on with confidence. But if you overpay by 10, 15, 20% at the start, it’s very, very hard to recover that ground however well you manage the renovation.
The assumptions trap
There’s another way people end up overpaying, and in some ways it’s more subtle. Rather than simply getting carried away with a deal, they start to reverse-engineer the justification for it.
They want a deal to work. They’ve been looking for a while and haven’t found anything that stacks up. And so, almost without realising it, they start plugging in the most optimistic version of every assumption. The refurbishment is going to cost less than it probably will. The resale price is going to be a little higher than it’s likely to be. The timeline is going to be shorter than it’s realistically going to be. The finance terms are going to be as good as they could possibly be. And when you run all of that through a deal analyser, it tells you the deal works — because you’ve built the whole thing on best-case assumptions across the board.
And then reality arrives. The refurb takes twice as long. Every extra week of overrun means council tax, utilities, finance costs, and lost rental income that you were already counting on. The resale price comes in a little lower than where you assumed it would be. And the profit that looked perfectly comfortable on paper has shrunk to something much less satisfying, or has gone altogether.
A slightly pessimistic assumption is your friend. Not so pessimistic that nothing ever stacks on the analyser and you end up buying nothing at all — because that’s the opposite problem, and it’s a real one. But if you have to lean one way, lean cautious. The numbers need to work even when not everything goes to plan. And on a renovation project, something almost always doesn’t.
Spend efficiently
One final point, and it matters particularly if you’re at an earlier stage in your renovation journey. There’s a tendency among less experienced investors to assume that the bigger the renovation, the bigger the profit. More work must mean more value created. It doesn’t work that way.
The two areas that consistently give the strongest return in a residential property are the kitchen and the bathroom. A relatively modest kitchen upgrade and a decent bathroom refresh — in a property where both actually need doing — can add considerably more value than significant structural work that the market simply won’t pay a premium for.
There’s also a useful distinction worth understanding between modernisation and repair. Repair returns a property to the condition it should already be in — it doesn’t improve it, it corrects it. Modernisation lifts the specification. One creates value, the other recovers it. My preference has always been for cosmetic projects: properties that need an upgrade rather than a rescue, where the budget can be focused on the things that actually move the needle — kitchen, bathroom, heating, windows — rather than being absorbed by structural problems that are expensive to fix and don’t add a pound of value in return.
Here’s to successful property renovating.
Peter Jones
Author, property investor and ex-Chartered Surveyor
P.S By the way, I’ve completely rewritten and updated my course for 2026, The Successful Property Renovator’s Workshop — a comprehensive guide to renovating properties properly and profitably, based on my own experience across well over 150 projects over thirty years.
thepropertyteacher.co.uk/the-successful-property-renovators-workshop
