I’m currently looking for property to renovate for profit. I’m interested to know what everyone else looks for in a property with the same goal in mind?
Any help, tips or suggestions would be greatly appreciated.
Hi Lumwood,
I guess the “worst house in the best street” probably defines it well for many, just as long as the “worst” doesn’t mean too many $$$ otherwise it can chew up all your profits.
For me personally, a property that requires a little (or a bit more than such) cosmetic enhancements (paint, plaster, polishing, cleaning, re-freshing etc) but not a total overhaul. In other words, no structural damaged places.
But each person measures things differently, and it depends on how much time and money they are prepared to throw into the deal.
Hope this helps.
Jo
I don’t specifically look for properties to renovate for profit on the renovation, but I do like to buy properties about 5-8 years old that have been used for rental properties from day 1. By this time, they are tired and badly in need of paint which the previous owner won’t do. So I get them cheaper as they don’t present well. And, they are less likely to require expensive work done to them. Although cheap hot water services or air conditioners sometimes need replacing, it is rare to need anything structural. And, if you are selling for profit rather than renting, then these items may not be an issue anyway.
These properties I will clean up and do up over the next 2-3 years between tenants (I often get a window of a week between tenants when the property looks scruffy) until it looks good and rents easily. That way I build rental income as my profit.
Very appropriate for me that you should ask this question.Recently we purchased our first IP.We found you can easily overdo things and it has a tendency of soaking up cash. The people at Bunnings see more of me than my family. I have spent hours sanding filling and painting. If there is a lesson here. You must have short term and long term plan. Be very clear about what you are going to do . A strict budget. Be realistic about your skills and personal resources. Oh and read this forum. Particularly if there are imputs from Monopoly because she is a legend. Merry Christmas John
John Groeneveld
I am very handy and can do most things from plumbing to building sub walls and installations of kitchens…. I honestly believe that If I factored into the equation of my time into each deal…. then I have only created a job for myself…. Now if I am purchasing a run down “charming” Property…… I just wrap it to a handy man nad let them do all the work… use thier labour as deposit and they get to have the house the way they like it before they move in…. works very well.
Kiwi [baaa]It appears to me that it is your labour that will add value during the renos. If you buy a place to renovate make sure it is the sort of work you can handle in a short period so that you can get the property back on the rental market. Major work will delay things and may introduce outside ‘labour’ which will cost! I look for properties built after 1985 to include some depreciation into the scheme of things. It is easy to be overconfident and to underestimate the time neede to renovate. Time will be stretched out over different periods of the year, like xmas, and you will not be able to spend time ‘on the job’. The number of times I have said ‘never again’ only to be back at it for the next property. In answer to your question….make sure the renos reqd on a property are somthing you can handle in the short term.
Labour has been the main input for our IP We spent $1350 on rubbish skips. $1500 floorsanding. $1550 fence and gates. $2000 new bench tops and construction of back porch and steps.$1000 slim blinds. $500 paint and hardware.The house looks really great and the first tenant to walk in sighned.Local residents cant believe the changes. I am sure that it has improved our equity by at least $ 40K. I hope to be able to purchase another property within 2 years. Regards John
John Groeneveld
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