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.
then ask: how much better off would I be if I had gone to work all those days?
then ask: how much better off would I be if I had gone to work all those days?
