We are in the process of learning & fine-tuning our strategy, so everything is hypothetic for now [blush2]………….
While value adding via renovation or redecoration seems fairly straight forward, there has to be a fine line between value adding & over-capitalising.
I’m trying to come up with a relatively simple rule-of-thumb, as I’ve heard somewhere that a renovation of kitchen/bathroom should NOT exceede 10% of the total value of your property….? So does that mean you should aim at spending less than $30k on a property valued at $300k…? Is the 10% a sum of both kitchen AND bathroom, or can you aim at spending up to $30k EACH…?
For the life of me, I cannot recall where I got this percentage from. Has anyone here ever heard of it, or ever used it…?
Is there any other rules-of-thumb that might be useful? DOs & DON’Ts….?
Any input or advice would be much appreciated.
Not sure about your “rule of thumb”.
I have just finished a Reno for under 10K.
However, I did only pay 180K for the property – but it is now valued at 255K (finished 4 weeks after settlement and had 8 weeks access prior to settlement).
One thing I learnt the hard way was that the trades were hard to find and pin down to a time frame and many wanted hourly rates, while others didn’t even turn up.
I was renovating in the country area and understood that trades were scarce to begin with.
Good luck and I hope you enjoy the experience – I did.
I made mistakes along the way – but I have learnt a great deal.Thankyou for the reply, allana..!!!
Anyone else got anything else to add?
We went to a local meeting (run by troy&bec) a couple of weeks ago. They have generously shared a couple of recent houses they have done (thanks, guys [inlove]…!!)………I wonder if they had any sort of ‘rule of thumb’ figure-wise..?
When doing the “Buy-Reno-Sell”, does anyone use a % or ratio to the purchase value when setting a budget? Or is it a case-by-case thing….?
Hi all
Buy/reno/sell is my game, I do 1 bed aprtments. I donot have a rule of thumb.
It is project by project, though, I did do a standard budget for a 1bed reno. ie Kitchen/ bath/bed/lounge. which on my 1st one I was under.
I use this bench mark budget when I do my costings on properties that i’m looking at to buy and when I buy I modify it to suit the new one.
The modifications depends on how much I paid for it and how much I think I can sell it for and what profit I want (I work on a minimium profit margin when assessing new properties.
I do not get quotes (they are usually marked up for worst case).
though I have an apartment to do march/april next year that needs new lines ran for either elect or gas (the kitchen has never had a stove/oven? and its 40 odd yrs old, it has stainless steel benchs and a microwave?) I will get quotes, but not from my trady (as he will charge me this) to work out what way to go.I have formulars number of hrs x hourly rate for my budget.
I do all the work my self except plumb/elec.
So, I would suggest you work out the amount you could get when you sell after a reno – cost to buy/sell (puchase/stamp duty etc) – an amount you would like in hand = a rough amount for your reno.
My 1st went like this sell 205-210k – purchase/selling costs 190k – profit 5 – 10k = reno 10k, I went for 7k. The property I was looking at was 180k. I brought it.
I based it on private sale, (tried this, do not like it) when I had finished, the market was dictated a selling price of 225k. I ended up going through an agent and got 240k (a record for the area, apparently I do really good reno’s) – RAE fee 9600.00
I sold for 240k = profit approx 34k
I buy properties around 200k my reno budget is approx 7-10k 3.5-4% and 10% entry and exit fees/ rates / strata fees etc.
The profit amount depends on what your plan is, mine was to cover the wages I was earning working part time, so my profit margin was around 5-10k per property, so I could earn 20-30k per year.
I plan quick turn arounds and more time at home doing the parent at school stuff etc and less stress from bosses.that’s my method, I would like to know how others work it out also.
celeste
You must be logged in to reply to this topic. If you don't have an account, you can register here.
