My first reno project is finished. I would love some feedback re numbers etc

[mins]

3 months ago I embarked on my first renovation project with my husband. The house is finished and the first tenants are moving in today!

I would like to get some feedback from seasoned renovators and investors as to your thoughts on my costings and returns. I have also attached some pics so you get an idea on what we had to work with. Please note that there are a LOT of brand new houses around the corner which I would be competing with hence trying to make it look like a new house to the best of our ability.

Bought 4 bed, 2 bath house in Regional NSW in a town with a population of 40,000. Time taken from the time we got the keys to finished - 2.5 months whilst I worked 6 days a week and hubby looked after our young son and did the reno at the same time.

Purchase price: $245,000.
Cost of renovation: $41,000
House owes me: $286,000

Interest Only loan: $232,500
Repayments: $970 per month

Tenant is paying: $ 380 per week
Agent cost: 8.8%

Agent said he would list for sale at $360,000. He said realistically expect offers between $345k and $360k. I understand the bank val will be less than this.

What we learnt:
* Allow more time
* Allow for 10-20% additional than you budget for
* Have a tenant in before renovating otherwise it forms part of your capital base and not deductible
* Get quantitive surveyor through prior to starting the renovations

Sure, we have made some financial mistakes in the way we dealt with this property - budget was $30k and blew out, emotionally attached which increased expenses, did stuff which probably didn't need doing, not knowing about the tenant prior to renovating and didn't know about the quantitive surveyor and immediate deductions. All a learning experience for next time and still a good result at the end I think.

Love to know your thoughts....

 

[mins]

More pics but before blinds went in:

 

[mins]

 

[MRO]

Well done! Over a few months you have built some equity and have a positively geared property! Now you can sit and wait and let the market do its thing.

The comment regarding the capital cost and deductibility isn't necessarily true. A lot of significant renovations are not immediately deductible even after the property has been renovated. I think the extra rent and better tenant you pick up due to the quality of the renovated house will more than pay for the lack of instant deduction.

 

[wylie]

What a difference between the "before" and "after" photos. You did a great job.

It would be good to see the break-up of the costs involved.

How old is the child that your husband was minding whilst also doing this renovation. I'm seriously impressed.

 

[mins]

Thank you for your responses. I appreciate it. Our son is 6 years old. Although he is at school my hubby did the drop off and pick up every day, still did canteen duties 1 day fortnight and ran him around to his sports after school and weekends.

Some of the major costs were:

Kitchen - $8500
Tiling - $7000
Plumbing & Heating - $6000-7000
Electrical - $1600
Tree removal - $1000
Carpet - $2100
Concreting - $3000
Painting -$3000
Blinds - $2500

And a LOT of sundry costs

 

[CHAOS]

Mins - reno looks great. What an amazing job you have done.

...when do you start the next one?

 

[coastal]

Brilliant reno...nice, simple and profitable

 

[coastal]

do you have any pics of the outside?

 

[DeeC]

Congrats Mins, what an achievement. I'd be proud!

Did your husband do the actual work himself? How much did you outsource and manage? Clearly a nicely profit on the job of >20% but I just wonder if your husband had not been minding your son, would he have earned extra $ elsewhere, e.g. what was your opportunity cost and could you make a similar profit on the next job by outsourcing?

 

[Colin Rice]

Wow, great first effort. Well done mins!

 

[Moon91]

Purchase price: $245,000.
Cost of renovation: $41,000


What we learnt:
* Allow more time
* Allow for 10-20% additional than you budget for
* Have a tenant in before renovating otherwise it forms part of your capital base and not deductible
* Get quantitive surveyor through prior to starting the renovations

Sure, we have made some financial mistakes in the way we dealt with this property - budget was $30k and blew out

Nice work!

As it was your first reno, could you tell us how did you evaluate budget and time required?

The fact that you reno cost is not deductible could be a plus in regards to CG, isn't it?

Thanks

 

[mins]

Thank you everyone for your kind responses.

CHAOS - We plan to go again in about 12 months. I want to pay down some of the reno costs of this property first. I think the next one would be either a newish house for depreciation reasons or something that could be rented immediately and just needs a touch up when that tenant moves out.

Coastal - We didn't do anything to the outside of the house except paint and remove the trees. We did do some concreting because I didn't want to be sued if someone hurt themselves. I figured that because I was accepting pets, it would be better not to put a lot of money into gardens.

Deec - My husband did a LOT of the work himself. His eyes are not good so when it came to painting I had to go after work to do all the cutting in etc. I figured that if we had more time then he may have been able to put a slightly cheaper kitchen in. I would have liked him to try the tiling himself but we were concerned that it would look terrible because he wouldn't be able to see if it was 100% level etc. He might try tiling our home which doesn't bother me too much. One thing about out here, tradie prices are higher than you would pay in Sydney which is disappointing. I will have to have a good think about the points you have raised for the next one.

Moon91 - We know the agent well so he allowed us supervised access to allow tradies in for quoting between exchange and settlement. We generally got 3 quotes for the main work and when my husband was talking to them he asked how long they thought the job would take. Once we had the quotes and the timing we put it all together. Some things I said my husband can do himself because I couldn't justify the cost even if it took a bit longer. Originally I was hoping to get away with a $15K budget. I was going to put in a second hand kitchen and paint the bathroom tiles etc. But when I did more research on rental return and property prices, I changed my tactic to upgrade the inside to be like a new house which increased the budget.

I hope all that makes sense lol.

 

[wylie]

Some of the major costs were:

Kitchen - $8500
Tiling - $7000
Plumbing & Heating - $6000-7000
Electrical - $1600
Tree removal - $1000
Carpet - $2100
Concreting - $3000
Painting -$3000
Blinds - $2500

And a LOT of sundry costs

The kitchen looks great and at $8,500 (including appliances?) I don't think you could have done it much cheaper and still have it look so good (especially with what looks like a granite bench top?). The last kitchen we put into a renovation was a second hand one, which looks fantastic and cost us around $3K. Buying second hand is something I'll look at again, but it means lots of homework and "making things fit".

The other costs seem to be okay too. When we go back and renovate houses that we first helped my parents renovate (sometimes 20 years later), I realise that whilst we tiled back then to save money, it looks like a handyman did it. The tiling is okay, but certainly doesn't look like it was done by a professional. We would never tackle tiling now, and the photos show that your tiling looks fantastic. Tiling and floor sanding are two areas that I would not hesitate to have done professionally. I've seen too many bad jobs where it is clear it was done by the home owner (including us).

 

[Moon91]

Hi

One more question, did you choose tilling over timber floor because of price or because of personal choice? Did you receive quote for timber floor for the same surface, what is the cost/sm2 please?

Thank you for keeping us informed! A lot of people on the forum like real life example rather than theoritical book!

 

[Piston Broke]

Looks great!! Well done.

 

[mins]

Moon91 - I got all the the tiles for the entire house for $698 from a tiling store which was closing down. My husband got there on the second to last day. Not much stock left but 120m2 of the 300 x 300 white floor tiles, 4m2 of gloss 200 x 200 black tiles for the splashback and 15m2 of the 200 x 200 white tiles for the bathroom, laundry and toilet. I decided later that I wanted to change the floor tiles to grey in the bathroom, toilet and laundry but I think they were about $150 - $200 for the lot supplied from Amber tiles.

I thought tiles would also be more durable and easier to clean too. My main factor though was the great deal we got on the tiles because it saved us $3000-$4000. Google was my best friend lol.

 

[Of The Vultures]

Great job you've done there Which regional town is this in?