Hi Guys,
I am thinking of buying my first IP renovating and selling asap.
I am currently in the process of doing my financial feasibility calculations to determine whether it will be profitable.
Transaction and holding costs take a large chunk of your profit unfortunately.
It seems as though renovating for profit in the lower end of the market (median price $430,000) is hard to make a decent profit because the upside potential is limited.
I am curios to know what people think about this and there experiences?
I am of the opinion that the big profits can only be made in the higher end of the market where median prices are higher.
($650,000+)Has anybody had any different experiences or disagree?
Look forward to your responses.
Cheers,
Mav
Hi Mav,
We have 4 renovation projects on the go at the moment in Brisbane and the Gold Coast at the moment. We will be onselling them for $270,000 (Gailes House), $370,000 (Nerang House), $290,000 (Logan Central House) and $275,000 (Rochedale South Unit). All at the affordable end of the housing market.
In my personal opinion only and I have been doing it for 10 years and done will over 100 properties is that … "You make your money when you BUY!!! This was drummed into me early in my property venture by John Burley (USA property educator … if you did not know him).
Renovating the property and possibly selling it for a premium is for us simply icing on the cake and makes it sell faster.
I believe the main reason why people do not make money out of renovating is that they do not buy well in the first place.
Therefore you can make only in the sub $430,000 market … you might make a bit more in the $650,000+ market. Just be careful you do not over extend yourself if you are new to the game in the higher price property.
All the best …
Property Trader | Boston West Pty Ltd
http://bostonwest.com.au
Email Me | Phone MePrivate money lending opportunities available paying upto 12%, secured by bricks and mortar!
We've got clients that have successfully purchased/renovated/sold in a large variety of suburbs, types of properties and price ranges from all around Australia. Feel free to have a look at some of these case studies which I'm continually posting on the website – http://www.WinningFormulasForSuccess.com
Wishing you every success, Ana
Hi Guys,
Thanks for the response!
I am currently looking through the case studies. Some good outcomes. I like the fact many of them are based in Melbourne and I am familiar with the suburbs.
Cheers,
Mav
Mav,
whilst it is a very valid question you ask, maybe more important is your financial situation. You have to look at how much you can borrow and still have cash reserves for a reno project. If all you can raise is let's say $300k, then the lower end of the market is all you can do. Don't forget to factor in that you will need existing cash reserves for all sorts of additional costs during your renovation project. If, on the other hand you can easily raise $600K, the doing one project in that price range will be a lot easier than doing two in the $300k price range. I'm not sure the profit margin will be that different, you should still be aiming for at least 10% (spend 10% of the purchase price on the renos, and then make 10% profit on the purchase price). You can make a profit through renovations in any price bracket , as long as your research is sound.
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