It seems that the primary purpose of the renovation is to fill up the time needed for the market to move.
Exactly, no need to wait for market to move to resell or refi
In which case your profit is not from value added by the renovation, but by the difference between purchase and market price of unrenovated product.
No its from the combination, if Nathan tried to sell one of his burnt out properties without fixing the problems in many cases he wouldn't find a buyer. The big money is from fixing a problem other people cant or wont fix
And, of course, the "elephant in the room" that no flippers have ever answered satisfactorily for me is how they get around this dilemma: if you have a builder, it's even harder to squeeze a profit out of the project. If you don't use a builder (or have an owner-builder's licence, which is only good for one reno every several years anyway) your renovations are illegal.
This is only an issue if you need a building permit with a value over $5k, then you need a builder or owner builder status, otherwise you can repair and install anything you like.
I
do think it's possible to make a profit from a renovation, but the profit has to be there even when using a qualified builder, and buying and selling at market price in a level market, otherwise it's not the renovation that's made you a profit.
I dont think the simple arithmetic of 1+1=2 applies here. If you pull apart a deal that includes a reno and you say well the final value was 200k, the reno cost 20k, the house was bought for 150k, that doesn't mean the house could've been resold unrenovated for 180k. Its the combination that adds value, which is why i agree with you when you say it's not as easy as it looks, you have to be able to see in multiple dimensions
It's not as simple as picking any unrenovated property, renovating, and then hoping you'll get back more than you've put in, as many seem to think. Unfortunately, early in the noughties the market was consistently rising and this strategy worked
because of the rising market, encouraging heaps of people to think it was as easy as outlined.
Totally agree ozperp!