Hi All
I am toying with the idea of buying houses/units and doing renovations to them. I am pretty handy with tools etc and the wife is an architect so thought it might be viable. We currently have an IP but are sick of waiting for the capital appreciation so we thought it might be a good idea to take matters into our own hands
What is everybody else's experience with such a strategy ?
Also does stamp duty act as a real barrier to success here.
Finally if anybody can recommend any good websites or books on renos that would be great. I am already across the Reno Kings stuff but anything else would be great.
Cheers
it depends on which way the market is going.
currently the market is going down, so its unwise to do reno's for resale, as you will almost certainly lose money………and thats before you take into account stamp duty, agents commission etc!
There will be such awesome deals coming in the future, It really is very excite, I can't wait.
You will be able to buy good homes for 200k, land for less then 100k, Office Blocks will be reduced a few hundred thousand and you will be able to buy shopping centres for only 1 mil.
If you really want to make money now you should be playing the stock market every day, And pulling out all your cash at the end of each day.
The volatility in the market the past month has been awesome stuff. You can make a few percent on the market every day !
You could have made 10% on monday in 1 day !!
I doubt you could buy shopping centers for 1 mil.
that's BS……. sorry mate.
a little knowledge is dangerous, eh hbbehrenhdorff?
I giggle every time you talk about the share market like you're some kind of guru.
you CLEARLY don't have the first friggin clue!
crashy wrote:a little knowledge is dangerous, eh hbbehrenhdorff?
I giggle every time you talk about the share market like you're some kind of guru.
you CLEARLY don't have the first friggin clue!
??
TheYoungInvestor wrote:I doubt you could buy shopping centers for 1 mil.that's BS……. sorry mate.
See, here comes some more arrogant dribble, I say shopping center and then you just assume im talking about pacific fair
Getting back to your original question!
It is not currently easy to make money from a reno, but is possible. But you would have to buy (very) well, budget your renos tightly and stick to it, sell quickly etc. You mention your wife is an architect, to use her professional skills would mean you need a D.A. (ie structural changes), which means your holding time is longer, which saps up more interest on your loan.
If you could live in the house while you reno'd it, would save your rent in the meantime. If you have young kids, this could be impractical/unsafe.
If I was you I'd be doing Dean and Elise Parker's seminar on Renovations. They've got a great system for counting all the costs.
Much cheaper than doing one, and blowing your budget and then not being able to sell easily.Good luck!
Quickchick.
reno's are pus and pain. Unless you buy a house for less than market value forget about it
there is another issue……
in a boom, there are people who will pay extra for a renovated property. in a bust, there just arent.
people seem to think 'renovating for profit' means:
1. buying any random house @ market value
2. spending 50k by hiring tradies to do all the work
3. selling for 100k more than you paidthe simple fact is, buyers arent stupid. they have all been watching the tv reno shows and think its easy, cheap & quick to do a reno, so why pay through the nose to buy one already done?
the only way to make money by renovating is to:
1. buy well under market value AND
2. renovate for far less than it should cost* AND
3. sell for market value or above* usually means doing most of the work yourself, buying materials from auctions, ebay etc
There are people who suggest you can make money doing a quick paint & carpet replace. I personally think people who suggest this are deluded. you will find it very difficult to overcome entry & exit costs (and make a profit) by doing a tiny amount of work……..In this excessively taxed country anyway……….
I try to do a $100k reno for $25k. I only buy from desperate sellers, and I add square footage to the living area somehow.
I try to do a $100k reno for $25k. I only buy from desperate sellers, and I add square footage to the living area somehow.
If you don't mind me asking, what is your tip/s to do this?
well Ive explained how to keep costs down (auctions, ebay etc) and do most work yourself. I often buy tiles for $5/m and spend under $1000 on a kitchen.
theres no point looking at a property that the owner doesnt NEED to sell. sometimes they are testing the market, "might sell if I get a good price". now and then you discover the mythical "motivated seller". someone who just wants or needs it sold. I tell every agent I know that this is who Im lookin for.
I need to know that Im buying under market price, so that if i discover Ive bought a lemon, I can resell without losing money.
my first reno was bought from a guy going through a messy divorce.
advertised price was $239k, it had been on the market for months. It seemed very cheap for the area and had a lot of potensial. I acted disinterested and walked around with hands in my pockets, saying nothing (agents HATE this). At the end of the viewing I said I would be interested @ $210k, but since the owner probably wouldnt accept that, I should be on my way. The agent said "well actually he might, lets give it a try" My 210k offer was countered with 220k, obviously a big drop from the 239 ask. right then I knew he was desperate. In the end I had to pay 220k but I got him to do a lot of work to the house before settlement.
9 months later I got a valuation and the valuer asked "i see you paid 220k, how in hell did you manage that?"
2nd was bought from a guy who had been laid off.
3rd was bought from an old guy who was ill and just wanted into a retirement home asap.of course I didnt know any of these circumstances when submitting my offers, as no decent agent would ever tell you. I usually found out from the neighbours months later.
A wise man once told me: " if 80% of your offers arent rejected, youre paying too much"
I do 2 sets of figures. one is the actual projected figures, and the other is the set I show the agent. I convince the agent that I need to spend 80k on a reno when its actually 20k, I massage the figures until it looks like I have only a $10k profit margin. Then the agent tells the seller that they cant ask for an extra $10k because that would wipe out the buyers profit margin, so why would he bother? Its also easier to say "at this price its viable, but not at this higher price" rather than "Im a tightass who is trying to screw the seller out of every last cent". show the agent that its a business decision and not an emotional one. you are doing it to make money.
In my real figures, I expect $10k profit per month. so a 6 month reno would need a $60k profit.
as for adding square footage, thats sometimes easily done.
my 1st reno was legal height underneath, but only used for laundry & storage. I created a 2 bed flat.
my 2nd reno was a small house with a huge covered deck. I enclosed it in and added bedrooms & extra bathroom. it was also legal height underneath so that became a 2 bed flat also.
my 3rd reno had an extension at the back with extra bedrooms for a growing family. I made this into a flat and sold to an investor.Thanks Crashy, I appreciate the hopen and honest advice. Too often on the forums people spam/abuse others for simply trying to learn something. All the responses are great and I am thinking my strategy through carefully
hbbehrendorff wrote:There will be such awesome deals coming in the future, It really is very excite, I can't wait.You will be able to buy good homes for 200k, land for less then 100k, Office Blocks will be reduced a few hundred thousand and you will be able to buy shopping centres for only 1 mil.
If you really want to make money now you should be playing the stock market every day, And pulling out all your cash at the end of each day.
The volatility in the market the past month has been awesome stuff. You can make a few percent on the market every day !
You could have made 10% on monday in 1 day !!
Seriously mate, please don't litter the posts with this. The assumption is that most investors on this forum are financially literate. Speculating is not investing. More importantly it is not an answer to my question
Im with Crashy – the only way to reno cheaply is to buy off eBay – buy all the items you need to replace then hire a handyman, local trades people to install it all. We did our reno's so cheap using quality applicances. They look fantastic. The units were renting for $100pw before the renos and were renting for $185 after. The house was bringing in $190pw and after the reno it was bringing in $305. The best thing about buying from eBay is you can pick up brand names for a song and they look great.
leebee, thats awesome increases in rent. can you tell us more?
Adding living space is something that has worked for me. Building underneath Queenslander style homes. I have done it slowly though and lived with my family upstairs while doing this. This also negates CGT when you sell or transfer into trust.
The current house a queenslander that I live in has a lot of space it already is built in underneath and we will probably modify the floor plan sometime. When I do I will make sure that I increase bedrooms as I will trun it into an IP some time in the future.
Needing DA from council, I presume, Bardon.
What is the minimum height to build under? Or will it vary from council to council?quickchick
bardon wrote:Adding living space is something that has worked for me. Building underneath Queenslander style homes. I have done it slowly though and lived with my family upstairs while doing this. This also negates CGT when you sell or transfer into trust.The current house a queenslander that I live in has a lot of space it already is built in underneath and we will probably modify the floor plan sometime. When I do I will make sure that I increase bedrooms as I will trun it into an IP some time in the future.
But your only exempt from CGT on your PPR, Which means you have to continually "upgrade" to a dearer house in order to not pay, But you can never get out of any tax, All you can do is play around with the timing.
I think a better way to do it is to hold the houses as part of your superannuation
crashy wrote:leebee, thats awesome increases in rent. can you tell us more?Hey there crashy
I looked all over for IP's and came across a pretty run down block of 3x 2br and 1x 3br unit the size of a house with ensuite. They were quite dirty to look at inside and the same tenants there for so long that the landlady didnt have the heart to increase rents. We could see the potential and set about buying up replacement items on eBay and also the local Queanbeyan auctions where they offered to come down to Albury to install the kitchens we got from them – with granite bance tops included. We got new blinds and all other items including tiles from eBay at a fraction of the cost.
We then used a local semi retired builder to do most of the other work and used local tradies to install all other products. We replaced the lot. We did the painting ourselves – and I would never do it again let me tell you and fully remodelled 3 of the units. We got ourselves a fantastic property manager and from $100 a week to $185 as soon as they were completed for the 2br and $305 for the 3br. We also used a little bar area and turned it into a study!! Now we have a 3br plus ensuite plus study home!!
The trick was buying all the items ourself – taking out the cut from the middle man. We replaced everything and did it for so little and have transformed the place. We have just finished the strata of the house and will sell that off soon to give us more capital but will keep the units as they are worth holding for now.
Im happy to answer questions anyone has
Cheers, Lee
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