Hey all,
Being new to this forum and this way of investment I hereby probe your minds and wish to hear your wisdom on this matter.
How profitable is renovations really? If you could afford to do the renos and buy the house's without the banks could one successfully make a healthy living out of this? I know that a majority of you all on this forum do this as well as other techniques to invest and make a decent ROI but is it possible to make a LIVNG out of this and one day a successful business?
Me and my partner were talking about this and were wondering on the long term viability of it all.
Cheers all,
Benni
Not my area of expertise, but a couple of thoughts:
1. Yes, people have done this as a living and built successful businesses out of it.
2. It depends a lot on your location. It will only work in a market where there's profit. This sounds obvious, but some people seem to think all they need to do is renovate and they'll make money, but there are locations where basically the price of a renovated property equals the price of an unrenovated property plus renovation costs (and it wouldn't surprise me to find out that there are places where it doesn't even cover that). You need to either be doing it in an area where the margin exists between values of unrenovated and renovated properties, or you need to be able to buy properties for below market value to create that margin.
Some people do make it work but it's certainly not an easy feat (not as easy as the home reno shows will have you believe).
As mentioned above, it can be dependent on the location and the demands of the demographic within that particular location. It also helps if the market is rising – at the moment, most markets are stagnant or going backwards.
Another important thing to remember is that you're liable for full CGT on any sale within 12 months (you get a 50% concession after 12 months).
At the end of the day, if you've got the will you can make anything happen.
Best of luck.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
just remember the killer stamp duty on purchases. It varies between states, but in NSW you can very quickly burn $20 – $30k in taxes and charges on each purchase / sale – this quickly erodes a lot of profit!!
Yep good point. It's not just the sales costs that you need to incur – the purchasing costs can also be a killer.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
We are full time Professional Renovators and yes we go through an extremely thorough process to make sure we profit from each project.
There is so much more involved with renovation profits than tax implications and feasibility. We’ve invested years into our system and it now runs like clockwork- regardless of the state of the market.
Renovation tv shows, magazines and seminars are great beginner tools to be inspired by- the real learning is in taking of the theory and putting it into practical application.
Holly
Another option is to renovate and hold (as opposed to renovate and sell).
Here's a case study based on how my wife and I, as well as many of my clients, have used this strategy – http://www.passgo.com.au/blog/25-the-project/67-how-to-use-the-equity-in-your-home-to-purchase-an-investment-property
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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