Hi, Its easy enough to find any property in poor condition right? By trade i’ve been doing interior construction for years now, i have a supplier for various material (framing, plasterboard, skirting etc) and obviously a wide range of tools & lots of know-how. I’m sure i could do just about all the labour myself. My question however.. How can i be positive the property will result in profit after a make-over? Is it possible for it not to jump in value after a reno? has this ever happened before, Someone buys a house, spends money on it & has no return? ? Just to get started i would feel more comfortable doing the labour myself since this will be purely to minimise the reno expense as much as possible.
Any advice or comments will be greatly appreciated.
It’s very common to see ppl spend say 100k on renovations and see the it increase the value by only 50-70% of that 100k…
1. they do the wrong type of ” investors” renovations – the type that adds NO value to the place…instead it’s more a personal preference – ie having a diff colur roof, changing the roof type having a full alarm system, re-painting a perfectly good looking place to a particular color they like- the list is endless…
2. Over budgeting- cost of renovations is more then the market
3. Lack of research on the AREA- not all property depending on the area/location would bring a higher price when renovations are done; because just be aware “market and valuation” price is based on comparative sales….you need something to compare to!
Ie Building a pergola; where the market in the area normally don’t have fancy pergolas…Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
AdisKay,
I just wrote a small piece on reno's in my blog – http://www.mypropertyjourney.com that may help somewhat.
the most important is to have a budget that you stick to, don't get "emotional", keep it simple! you want to impress the valuer at the end of the day, no one else.
Thanks guys!
This blog made my eyes water, couldn’t stop reading thanks for that link
Just today i read the chapter regarding renovations in Steve’s book.. turns out DIY isn’t such a great idea.. hmm understoodHi AdisKay,
If you visit the link below, you'll find two short videos with some great tips on finding a suitable suburb for a reno and also doing a reno budget. You need to be mindful that the end sales price is achievable and will deliver a profit after accounting for closing costs (incl stamp duty, conveyancing), holding costs, reno costs, selling costs (incl REA fees) and more.
You're right in your caution, anyone can find a run-down house and do it up, but its not always profitable. You should be able to save a few $$ by doing DIY if you know what you're doing, but if its happening after regular work or on weekends be aware of the extended time frame adding to your holding costs.
the link is: http://www.propertymeeting.com.au/
Cheers,
EmmaHave a look at Nathan Birch's you tube videos (b invested channel) to see how he makes money out of renovating.
Hi, where are you located?
I have a buy Reno strategy. I buy bread and butter properties. Do z complete Reno and then they are CF neutral at worst with equity go borrow if need be. full Reno takes 4-5 weeks. Then holiday!!
The main thing is you MUST do you research into the area to know the end price After Reno. The. You need to have a budget and stick to it. And think of it as an investment. Not what you like. Also be very careful of buy price. Sometimes places in need of a Reno go for not much cheaper than a re odd place. There are lots of people getting into this now and overpaying. I am seeing this in Western Sydney now ( thanks Nathan). Too much publicity in the area and everyone thinks they can buy a place and make money.
I love renovating. That’s the thing. If you love it all is well. If you don’t it’s not a good strategy. We do most of the work ourselves. Only things we don’t do are bathroom waterproofing and tiling, electrical ( of course) and plumbing.because your doing most of it yourself and have been doing this stuff by trade for a while now, it isnt like the usual cautionary tales to the home handyman looking to rennovate a place for profit. i am assuming you know your stuff so half the advice out these is not suitable for your position.
Like some guys here have stated, look at rennovations that value add only (get friendly with some of your local real estate agents to learn their criteria for pricing a house) avoid re-doing something that is cosmetic and does not need fixing. Money saved is profit earned.
If your not from the USA and are looking to invest there, look into US specific housing issues that you need to be aware of from a buyers perspective and an OHS perspective (old lead glass windows / lead based paint / asbestos / Chineese Drywall)
Lastly be aware of your limmitations, if there is work your not licenced to do it means getting in a contractor, this should be avoided as it'll eat into your profit… but do your sums ! it can still be worth doing on the odd occasion.
speaking of doing research,
its so much stuff on the internet, that its hard to trust anything..
and the paid stuff are really expensive..could anyone please suggest some good research paper to study the market..
i particularly want to know gold coast market..something around bonogin would be great..
thanks in advance..
You won’t find a paper that will tell you all you need to know. You need to look at an area and see if it fits YOUR criteria. Eg do you want CG? Yield? You need to look for what’s important TO YOU. Eg infrastructure, transport, median price. Too much to list. If you have an area in mind start looking at the stats. Go to open homes. Speak to real estate agents etc etc
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