Hi Aceyducey and others

[Cosmo]

Hi Aceyducey

Sorry to target you like this and I hope you don’t mind. I know from my readings on this forum that you renovate for a living. I have renovated to let in the past and I find this activity worthwhile to achieve higher and quicker rents.

Two of my brother’s friends have renovated houses to sell in the past (although not in boom times) and both of them say you make back your renovation costs plus about 5% “hassle factor”. Subsequently they don’t do it anymore. I know it comes down to below market value purchases etc but is renovating during boom times and a continuing low interest environment typically more lucrative than “normal” times? Could there be a little confusion between what is normal CG’s and what CG’s are created by the renovation during boom times? My brothers mates are saying forget renovating for a profit there really isn’t any.

What’s your views

 

[Aceyducey]

Basically it comes down to the adage that you make your money when you buy not when you sell.

You've got to research areas thoroughly as during a boom often you may as well just hold onto an unrenovated place as it will be worth just as much as a renovated place - a high tide raises all ships.

However in the right areas with the right properties you can make good returns (30% or more) on renovations.

Just make sure the reno is as low cost as possible, deals with the essentials rather than adding frills to an already OK place and you've got the comps to justify the reno in the first place.

If you consider it a business rather than a hobby & run it tight & proper there is money in it.

In a flat market there is still room for renos, you've just got to find those bad smelling ex-rentals with holes in the walls or the must sell quickly properties that are sold below market price - and in a falling market, well the key thing there is to buy as many places as possible as fast as possible Then reno them when the market begins to rise again to max the value.

A lot of other people on the forum have also renoed places at one time or another (and a few others do it as a primary strategy) - anyone want to add more comments?

Cheers,

Aceyducey

 

[chrislaw]

Cosmo,

I think there is always money to be made if you know what you are doing, eg, know if the buying price is good value, know the costs of renovations and know if that brings a good profit compared to sales in that area.
My wife and I have renovated a few houses and it was to improve the price as much as to have a nicer place to live. We look at places that can be improved and the involved costs before we consider it. I earn a low wage and our renos have made us many times my wage over the last few years.
Our current house we moved onto a block, working out the figure showed it was a worth it. I went over budget but still have made a gain of 80k in 7 months (Not trying to brag here). Keeping this one though. It was alot of work but I enjoyed do it. I wouldn't have done it if the total costs didn't come miles under what I could sell it for otherwise why bother.
I agree with Aceyduceys statement also and think that in this market ppl are making alot of money regardless of renovations.
A house nearby gained 78k over the year and they only painted it, another 105k over a year and they only built a front fence. Crazy times but when it settles I still think you can make money if you take your time to research but don't base your figures on the above prices as these won't last.

Chris

 

[Cosmo]

Thanks for your input guys.