cheque book renovation

[gailh]

Hi everyone,

I am dead keen to get into renovations, but am pretty low on handyperson skills. I can paint, but that seems to be the cheapest bit to pay someone else to do anyway.

Is it realistic to think you can generate much profit by doing a cheque book renovation - pay others to do just about everything. Let's say I shop around amongst local handymen rather than going for big companies and co-ordinate it all myself - will there be a profit margin substantial enough to make it worth all the heartache?

While I'm at it, any tips for renovating a kitchen (which needs a complete makeover) cheaply. Assume that a simple facelift won't work as there are not enough cupboards in good enough condition. Is there a cheaper option than simply ringing up 'Expensive Kitchens Pty Ltd' for a mega expensive quote.

Thanks in advance you guys.

Gail

 

[Mr Ed]

Gailh,

I believe you can get tradesmen to do the bulk of the work on a Reno, just you have to be careful with the costs, and when they do give you a quote allow for the unforeseen.
With your kitchen, I just did a full kitchen reno. Everything out and all new in. Total cost including labour was $4700, ($1500 for cupboards, $500 for bench top, $2400 for s/steel appliances including dishwasher, $300 for splash backs).

A local guy told me about this one, you go to a laminate supplier (Bunnings or magnet mart have them too) and buy the prefab cupboards. (I bought mine at Magnet Mart, but the local Laminate supplier has a better choice of colours I found out later). Anyway grab a brochure as it’ll have all the sizes on on it and prices measure up & buy the ones you need (they are nicknamed flat packs).

When you get them assembled (with a screwdriver dead simple) you’ll notice they are only 450 deep, so I brought them away from the wall & put a 650 bench top on top. Laminated that in a Garnite look a like and put a nice stained timber edge, and Bobs your uncle you a have an expensive looking kitchen without all the mega cost.

The idea of the new bench top is to conceal all the cupboard joins and to get a bit of depth cause 450mm is a shallow bench. Also allowed for the dishwasher to be tucked away nicely.

Hope this helps.

Ed.

 

[Kevmeister]

Expensive is a relative term... Don't forget opportunity cost, however. If you can "turn around" a reno in 2 months instead of 10 months (ie. by contracting out the work rather than attempting to learn/do it by yourself), then your annualised profit could be much greater.

Look at the shows like Auction Squad do in 1 day and the effect on prices it has (although I think they sometimes take a little *too much* credit).

Ikea might be worth checking out for their kitchens which seem of good quality and reasonable price.

 

[karsal]

Hi Gail.

Didn't want to reply directly as per your email.

Time leverage is important. I made the mistake of doing too much and it cost me more in lost income than money saved.

There are some great places to save $$$. You just need to research.

Ultimately, it will come down to purchase price. Start with resale and work backwards allowing for a 20% margin.
Regardless of who does the work, the numbers must add up. ie: enough profit in the deal.

I will explain more on Saturday to save me repeating myself.

Cheers,
Sam.

 

[Mr. Fabulous]

Gailh,
My cousins are cabinet makers, I can tell you from first hand experience, they are very good at what they do, and have a strong work ethic. However, they may be a little too expensive for an IP reno, but if you're interested, drop me a private message and I'll see what I can do for you.

Mark
'no hat, some cattle'

 

[Kristine..]

Gail

I'm in the home run of a very extensive renovation in Melbourne easter suburbs.

I have put a lot of labour into the project myself, mainly cleaning, rubbish removal, painting etc. plus design, plans and imagination.

Everything else I have paid someone else to do. No concessions, no favours.

The result is a five star renovation. My target market is the sophisticated buyer, and the work and presentation is and will be to those standards.

Renovations shouldn't be cheap and nasty, just a lick of paint and prune the garden. If you are clear about your target market, you will need to be paying trades to do the work anyway.

Before you buy, make sure the resale market will pay what you think the renovated house will be worth. Visit as many 'open for inspection's of both before and after houses as you can. Added value doesn't come out of thin air, and it's important to see what other people are doing in order for you to evaluate the extent of the work required.

Just on the subject of kitchens, I picked up a business card from my local milk bar, and the cabinet maker told me that he 'measured on Monday and installed on Friday'... Yeah! Right!

Well, he did just that!! And I got a great kitchen (with pantry & wall oven tower), bathroom, laundry, wall inserts, drying cabinet, mantlepiece, study desk, linen shelves and wardrobe shelves for under $8,000!!! installed, and with a construction guarantee!!! Plus, anything I've asked for he has quickly and cheerfully done. A young man with a great future ahead of him.

So - cheque book renovations are OK, but you will still have to put a lot of planning and organisation time into the project.

Good luck!

Kristine



PS If anyone would like Daryl's details (he has a small website) he is in the outer east / foothills area I am happy to provide same.

 

[noddy]

Hi Gail,

In answer to your original question, cheque book renovations can be quite profitable.

Trying to save money by being the Project Manager works if you are experienced and can offer volume work. Tradespeople who see you as a one-off renovator will more than likely give you retail price and standard service.

The was to make cheque-book reno's work is to understand the are you are looking in; knowing the cost of doing your reno; and....most importantly....knowing what the MAXIMUM buy price for the proprty should be allowing for your expected sell price less your cost of reno, cost of purchase AND your profit margin.

For example, if you are looking in an area where the market val of a 4 bed 2 bath is $200K; and you see one a fixer for sale for $150K; you would need to be able to do the "fix" for no more than $30K($10K finance/Stamp dutyetc...$10K profit) otherwise you will loose money.

Assuming that the tradesman charge the same and the end sell price is the same....spend your time looking for the fixer where your buy price is the lowest. Have your finance in place; learn how to do quick eye valuations and 1 minute inspections (look at the roof line for warping and external bricks for cracks etc..)

Renovating to a large extent is less about the cost of the trades but more about getting the property cheap enough in the first place. Look for motivated buyers (grass not mowed is one quick indicater).

Last tip....if it takes an afternoon to buy a fridge or washer to get the lowest price you can; be prepared to spend a month learning the prices and desired features in your target area so you can tell when your "bargain" comes on to the market.

Thats my 2 cents .

Noddy.
comes on to the market.

 

[gailh]

Thank-you everyone - that is all most helpful.

Kristine, I would love the name of the cabinet maker who did your kitchen.

My email is [email protected]

Thanks

Gail

 

[suejones]

Gail, Just one more thought...
We have done renovations both doing the work ourselves and getting someone else to do it.

Our first one we did ourselves which was worth doing as we learnt alot about what goes into a good job, how long it should take and how much it would, where to source supplies etc. Although it was hard work, it was great as now tradies can't pull the wool over our eyes!

The other renovations we have got others to do the bulk of the work figuring that our time is best spent looking for other opportunities. This has worked really well on the whole. However we have held these properties not resold them. We have had them revalued at 25 - 200% more than what we originally paid.

Both methods gave us a quality renovated property without going into the luxury catagory.

It really comes down to doing the figures and having enough knowledge to co-ordinate tradies and not get ripped off. As a woman (and at the risk of making a huge generalisation!) I have found that tradies usually give better deals to and communicate better with men.
Good Luck,
Sue

 

[Jacque]

Gail,

Yes- you can do a chequebook reno and still add good value. As others have pointed out, though, you need to be specific in how you spend your dollars and ensure that you're not overcapitalizing. I have done two renos this way, doing some of the grunt work myself (painting, cleaning, ugly jobs like filling gaps and pulling up floor nails etc) but mainly hiring the right tradies for the job. The time consumed finding and booking these ppl are vital to the reno, for if the schedule is upset due to unreliability it can extend the reno time and thus eat into your profits.
I aim to organise as much as I can before settlement, including putting an entry prior to settlement for renovation purposes clause (for quotes, measuring up etc) in all my contracts. This allows you to plan and carry out the reno in far less time and get that rent faster!
Good luck and let us know how it all goes