Reno with clean hands

for us it made MORE financial sence to get tradies to do all the work.  with us it woulda taken months to get all the work done, but only one week for all the tradies to do it – and they did a better more professional job.

so if it had taken 12 weeks (at only doing it on weekends cos hubby works, and we live 2 hrs from investment prop) we woulda lost $4200 in rent that we coulda been recieving, plus our expenses for getting the work done (and all the stress).  it probably woudla cost us about $1000 roughly in products/tools. 

instead it cost us $8000 to get it all done in a week by professionals. 

$8000 – $5200 = $2800 …. roughly what it cost us extra to get tradies to do it.  so for the sake of our stress levels and NOT losing our weekends (only family time), it was well worth the expense.

I agree with the above re knowing when it's best to do it yourself and when it's best to pay someone.
Also consider it may take you 3 days but a professional can get it done in a day so doing it yourself is false economy.

I love doing the renos  but won't take time off work to do it. I will work nights and weekends but obviously you can't do this for months on end. I get tradies in for some jobs (electrical, big tiling jobs etc).

Getting a project manager will obviously add to the costs. If you can organise tradies yourself it will be cheaper but working long hours makes it hard to track progress and see when you are ready for the next trade to go in and also that they are doing what you want and to a standard. Whether it kills the numbers depends on the project itself.

Maybe in your case.  Definitely not in mine.

Depends. You pay an extra $20,000 to get someone else to do it. Say you keep the property for 10 years. That's an extra $14,000 over 10 years in interest (assuming you paid the interest every year). If not it would be $19,000 and you still haven't psaid back the $20,000.  So then you sell it. You get $20,000 deduction (off your capital) which means you save $7000 (after tax). So you are $12,000 behind. False economy.

I'd rather have the money in my pocket NOW. I can use that $20,000 to go towards my next deposit.
So it's not a black and white issue. As mentioned-you need to balance time and money. Everyone is different hand has differing time and expertise constraints. Only you know what situation suits you.

Yep agree. I love doing the renos and it keeps me fit and I have the time as I don't work long hours so for me it's a no brainer with regard to doing some of the work myself.
If I was strapped for time and I didn't enjoy it I wouldn't do it. Life is too short to do things you don't enjoy.
Pretty simple really.

No I'm not forgetting that. I factor ALL costs in when doing my renos. As I said it depends on the individual and time. You need to work out what your time is worth. 2 weeks extra is not worth $20K. I buy bread and butter properties so 2 weeks extra interest is only $600. I can replace kitchen, bathroom and paint an entire house in 4 weeks and maybe even rip out a wall.

that's impressive.  How much of all that do you contract out to tradies? 

Hi all,

I can see the opportunities in doing Reno's

It is the time that kills it for me. I work long and stressful hours just so that I can secure property and service -ve gearing.

What little time I have left is spent with my family and sleeping.

The numbers need to work without me being on the tools.

Mario

Hi Catalyst,

Like you I enjoy working on the tools. I have been re-building my new home after the bushfires in 2009 as an owner builder but employing trades to keep the project moving. I am a project manager by trade and know the flow of processes in a building project. Plaster finally starts tomorrow. I am anticipating moving in mid-to-late February 2011. I have been involved on the tools throughout the whole project as well as working a full-time. As I have the project management skills and practical skills on the tools, I am considering changing my career and doing this full time as buy-renovate-hold for 12 months, and then if the market is right and the numbers stack up sell and move on to another project. I am fortunate enough to be in a very good financial position which would enable me to do this.
What I would like to know is if there is a formula you need to work to when renovating, ie: if I spend $1 dollar what is the expected $ return in value adding. Once again like you I would only be doing quick turnaround renos ie: paint, polished floorboards, kitchen and bathroom (the kitchen and bathroom would be new and modern and nothing too expensive).
Also, would I be better concentrating on 15K from CBD (Melbourne), or are the returns better further out in the lower valued properties?

Yes basic $1 = $3. Some say $2 but that's too low for me.

But you need to do the numbers for each case. Sometimes you can buy way below market and just spend very little and make a lot.
If doing it as a job you need to be more careful with your figures, especially if you are going to sell in 12 months as there's not a lot of room for error.

So do your figures before even placing an offer.
Factor in ALL your costs:- purchase, stamp duty, solicitors, bank fees, interest while doing the reno, reno costs.
Then your estimated sell price (be conservative). Also add any out of pocket expenses for the time held (if rent doesn't cover costs), rates etc.
The profit is your wages. If that's an amount you are happy with for the amount of time you spent doing it then go for it. If we didn't both have good jobs I'd do it. Well we do do it but not to sell. If we needed the cash though I'd do one to sell. Maybe when we retire.