Hi,
I’m thinking of doing a renovation or two. I’m pretty good with a paint brush and in the garden. However I don’t want to do the work myself but sub contract everything out.[builder] In your opinion, can one still make a profit on a renovation [surprised]– or will the cost of the tradesmen eradicate any capital gain (buy and sell strategy).[worried]If I do proceed, what should I be aware of — the pitfalls of renovation!![blink][blink]
Thanks
HelenHi Helen,
we just finished a reno – did it ourselves. We spent just under $40000 and added about $145000 (selling at the moment)
I’d say if I got tradesman I would have to come close to doubling what I spent.
The bonus would be that the tradesman would have had it done about a year ealier.
Matt
Hi Folks,
any more thoughts on this topic[biggrin][biggrin]Regards,
HelenHi,
Be careful. A lot of “renovators†fool themselves that their renovations have added huge value to their properties. Mostly, the capital gains have been attributed to an upswing in overall property values whether they did renovations or not.
I‘m not saying you can’t make money out of renovations. You can!
I‘ve noticed that the people who do really well out of renovating do a lot of it themselves. They buy before the market gets going (see para 1) they stick to a specific budget / timeframe and they know exactly what they have to do to get their price.A friend of mine who has renovated a lot of houses said recently (tongue in cheek)that he wanted to buy a fully renovated house trash it and sell it for a profit to would be renovators because everybody would think it was a bargain because it was trashed! Mind you this was during the last property boom in Sydney when anything sold for top dollar and everybody wanted to renovate! He also says that during quieter times renovating usually returns costs plus 10 % “hassle†factor.
Now that the market’s cooled you would have to be very careful renovating for a profit I reckon.
You may want to read the book “Building Wealth” by Russ Whitney – he talks in there in a fair bit of detail if I remember about how you can make quite a fair bit of money out of renovating. It’s a US law-based book, so I dunno bout some of the specific legalities.
But anyway, one of the things he talks about in the book is how where he is, you can be a contractor for your own properties without a licence. So what you can do is “hire” yourself to do some contracting work to fix up your property, then quote the cost to the bank with a few hundred % markup, borrow out this “cost” from the bank and use the excess cash to invest in more properties.
Sorry if i’m hard to understand atm, i’m pretty tired [sleepyanim]
Hi guys,
secretgnome, that is a different way of profiting from th reno. I suppose you are banking that the bank will value you house at what you would get for the sale.
Our theory is that after costs everything else pays for your labour. And yes tradesman will each up much of your profits. We did everthing…building, plumbing, tiling, painting….with the odd helper.
I suppose if you aren’t going to do the work, or aren’t prepared to pay for it probably look at doing uup place that need fairly simple changes.
It is amazing how much materials end up costing.Matt
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