Buying a ruin in Italy for investment can be an attractive strategy, but it presents both opportunities and risks. It is essential to do a thorough evaluation before proceeding. Here are some aspects to consider to see if buying a ruin as an investment is a worthwhile choice.
Location of the property
- Importance of location: Location is one of the most important aspects in any real estate investment. If the property is located in a developing area or in a location that is already in high demand (such as an art city, tourist area, or growing region), the value could increase considerably after renovation.
Acquisition and renovation costs
- Purchase price: Ruins can usually be purchased at a lower price than already renovated properties. However, the purchase price must be balanced with the expected cost of renovation. If the ruin is in a particularly precarious condition, renovation may prove much more expensive than expected.
- Calculation of renovation costs: Have a thorough technical inspection done to determine the structural condition of the property and obtain an estimate of renovation costs. Renovations can be unpredictable, so it is essential to budget extra for contingencies, which is usually between 5 and 10 percent of the estimated metric. The cost of necessary permits and approvals should also be considered.
- Possible incentives or tax breaks: In some areas, the government may offer incentives or tax breaks for renovating historic properties or rehabilitating blighted areas. It is important to inquire about possible concessions that could reduce renovation costs.
Potential for revaluation
- Appreciation of property value: Reassessment of property value after renovation is one of the key aspects. If the ruin is located in an area that is experiencing growth, the value of the property could increase significantly once the renovation is completed.
- Demand for renovated properties: If the demand for renovated properties in the area is high, this will increase the chances of profit, whether you decide to resell or rent the property. Miani Group specializes in finding strategic locations for properties then destined for the rental and buy/sell market.
Time and commitment required
- Project management: Through our real estate group, we are able to offer specialized technicians to manage the entire project through to completion, which is usually concluded with turnkey service about 18 months after construction begins.
Investment strategy: resell or rent
- Resell after renovation: If the goal is to resell the property after renovation, the market price in the area and potential appreciation should be considered. An attractive option might be to buy a ruin in an emerging area or one with high tourism potential, and resell it at a higher price once the renovation is completed.
- Renting the property: If you prefer a steady, long-term return, renting may be a better choice. In this case, you should also consider the potential for rental income in the area and whether the cost of renovation justifies the return on rentals. In tourist areas such as Umbria and Tuscany, short-term rentals can be particularly profitable.
Legal Considerations
Verification of ownership and legal liens: Before buying a ruin, it is essential to verify the legal status of the property. It is necessary to make sure that there are no pending liens or lawsuits, that the land is legally owned, and that the property complies with zoning regulations. Also, if the ruin is located in a historic or protected area, there may be regulations restricting renovation work.
Professional assistance
Miani Group can offer a comprehensive consulting service that can follow the investor from purchase to turnkey, planning all processes for project feasibility and proposing a detailed business plan on return on investment.