Reno Kings feature on ACA-Renoing a Bomb
- Thread starter Olly
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There is also the difference between repairs & capital improvements ie rennovations and how they affect your cashflow.
Repairs can be claimed as expenses, but rennovations are capital improvements of which only depreciation can be claimed.
The big queston being how much will the cashflow improve and what kind of ROI will those renovations generate?
What effect would paying that money directly into your loan have on your cashflow? And would'nt it give you enough equity for a deposit on another property? Does this achieve a better ROI?
They love to state on their ads "what's a measly few grand investment?" but they don't even spend a few hundred bucks on proper valutations...poor effort from self annointed experts.
imho
bbg2003
Repairs can be claimed as expenses, but rennovations are capital improvements of which only depreciation can be claimed.
The big queston being how much will the cashflow improve and what kind of ROI will those renovations generate?
What effect would paying that money directly into your loan have on your cashflow? And would'nt it give you enough equity for a deposit on another property? Does this achieve a better ROI?
They love to state on their ads "what's a measly few grand investment?" but they don't even spend a few hundred bucks on proper valutations...poor effort from self annointed experts.
imho
bbg2003
I have a few hypothetical scenarios about capital improvement.
Is removing a wall for personal taste and then tidying up the mess a capital improvement or a repair ? I mean you are subtracting material from the properties capital, that had an input cost. Then you are tidying up or repairing the wall with input capital of lesser cash value, than the value of material originally installed.
Any capital improvement then surely becomes perceptual, as technically you have actually subtracted from the capital material value of the property.
To further demonstrate this point somewhat conversely, say I knocked down all internal walls and removed the material from the premises and dumped it at the local tip. Then say I replaced all these walls with window sliding doors and blinds that actually cost more than the walls. Now perceptually, one could argue that we have now devalued the premises. Most of us would likely agree with that. Who wants sliding glass doors with blinds, as walls ? But then they cost more to install so I guess we have added capital inputs over capital outputs. You get the point. So where do we stand ?
I guess it comes to the question of what constitutes capital improvement ? is it the value of inputs contained within the buildings structure, or is it the market value as a result of change to the premises ?
Another example, say we completely demolished a smaller study with building fixtures, desk etc... that had an input current capital value of $6000 and spent $5,000 converting it into a larger extra bed room ( basically just 4 walls and a door ) . Now is that a capital improvement ? Some people like studies and some like bedrooms. Capital Inputs are now less than before. So what is it assessed on ?
Just thought I would throw in a curly one for all you property accountants.
Is removing a wall for personal taste and then tidying up the mess a capital improvement or a repair ? I mean you are subtracting material from the properties capital, that had an input cost. Then you are tidying up or repairing the wall with input capital of lesser cash value, than the value of material originally installed.
Any capital improvement then surely becomes perceptual, as technically you have actually subtracted from the capital material value of the property.
To further demonstrate this point somewhat conversely, say I knocked down all internal walls and removed the material from the premises and dumped it at the local tip. Then say I replaced all these walls with window sliding doors and blinds that actually cost more than the walls. Now perceptually, one could argue that we have now devalued the premises. Most of us would likely agree with that. Who wants sliding glass doors with blinds, as walls ? But then they cost more to install so I guess we have added capital inputs over capital outputs. You get the point. So where do we stand ?
I guess it comes to the question of what constitutes capital improvement ? is it the value of inputs contained within the buildings structure, or is it the market value as a result of change to the premises ?
Another example, say we completely demolished a smaller study with building fixtures, desk etc... that had an input current capital value of $6000 and spent $5,000 converting it into a larger extra bed room ( basically just 4 walls and a door ) . Now is that a capital improvement ? Some people like studies and some like bedrooms. Capital Inputs are now less than before. So what is it assessed on ?
Just thought I would throw in a curly one for all you property accountants.
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After seeing tradesmen clambering about everywhere in the background, there is no way anyone is going to tell me that all that is done for 25k, what a load of rubbish. And I agree, they need to stop getting their public image etiquite from Steve Irwin.
"Crikey",
JIM
"Crikey",
JIM
Actually Denis Backhouse (DB) said his renos blew out to 30k . They then talked about the importance of having a contingency $ pool
A number of times they mentioned cost cutting and using what is there.
For example DH said he found the sink by the side of the road - anyway you could buy a sink for $10 at a junk shop - just polish it up . Where as if u buy a new one u would spend around $300
also get undercoat tinted paint same colour as top coat , so less coats of paint needed.
The path shown on friday, cost $80 for the gravel +plus a few hours labour. DH also said he worked continuously for a month.
Also the carpet - 2500 for a 5 bedroom house. I'd say the tradesmen and builders gave DB really good rates. ie ie Paul Eslick and Geof Doidge regurlally employ builders / tradesmen so they would get the best rates. Maybe DH used same tradesmen.
Dennis also used to work for GD - do not know if he still does.
He has 3 or 4 other houses so he would have some experience in property renovation - I met him at the bne property expo about six months ago. However , MAYBE he had more access to the experts than a normal person does - since he used to work for GD.
Notice they left , what looked like the original stove there - ie a standalone.
So , i think the 30k would be reasonably accurate.
A number of times they mentioned cost cutting and using what is there.
For example DH said he found the sink by the side of the road - anyway you could buy a sink for $10 at a junk shop - just polish it up . Where as if u buy a new one u would spend around $300
also get undercoat tinted paint same colour as top coat , so less coats of paint needed.
The path shown on friday, cost $80 for the gravel +plus a few hours labour. DH also said he worked continuously for a month.
Also the carpet - 2500 for a 5 bedroom house. I'd say the tradesmen and builders gave DB really good rates. ie ie Paul Eslick and Geof Doidge regurlally employ builders / tradesmen so they would get the best rates. Maybe DH used same tradesmen.
Dennis also used to work for GD - do not know if he still does.
He has 3 or 4 other houses so he would have some experience in property renovation - I met him at the bne property expo about six months ago. However , MAYBE he had more access to the experts than a normal person does - since he used to work for GD.
Notice they left , what looked like the original stove there - ie a standalone.
So , i think the 30k would be reasonably accurate.
Have read the posts and would have to agree with Jaque.
What you saw on ACA was all the good "FUN" bits. But if renovating houses was so easy, and fun, someone forgot to tell me.
They had some great tips and ideas, that may seem new and gr8 to people who haven't renovated b4.
by the way, they did mention that you must renovate "FAST"
If you intend to do these types of renovations yourself, the only tip i could offer is find a good Chiropractor.
And get used to working 18 hour days minimum for 30-40 days straight. You will be able to achieve the same success.
Just don't think that it is as easy as it shows.
gecho
What you saw on ACA was all the good "FUN" bits. But if renovating houses was so easy, and fun, someone forgot to tell me.
They had some great tips and ideas, that may seem new and gr8 to people who haven't renovated b4.
by the way, they did mention that you must renovate "FAST"
If you intend to do these types of renovations yourself, the only tip i could offer is find a good Chiropractor.
And get used to working 18 hour days minimum for 30-40 days straight. You will be able to achieve the same success.
Just don't think that it is as easy as it shows.
gecho
That's the catch isn't it? The biggest cost of renovating is labour, and if you don't have the trades skills for something, you'll have to pay someone to do it properly. Which are usually kitchen, plumbing and electricals, which I've found are the most expensive parts of the reno job (in descending order).
Bill - I have in fact been able to do a comparison between two virtually identical properties (apartments in the same block - same floorplan etc). The unrenovated one sold for $120k. The renovated one (would have cost around $15-20k to renovate) has received offers for $175k (the seller wants $180k, so it hasn't sold yet). All within the same month. It would have taken around 2-3 months to fully renovate the apartment. So that's $30-40k profit (before selling costs and stamp duty), which, works out to be a pretty good rate of return on equity.
Cheers
M
Bill - I have in fact been able to do a comparison between two virtually identical properties (apartments in the same block - same floorplan etc). The unrenovated one sold for $120k. The renovated one (would have cost around $15-20k to renovate) has received offers for $175k (the seller wants $180k, so it hasn't sold yet). All within the same month. It would have taken around 2-3 months to fully renovate the apartment. So that's $30-40k profit (before selling costs and stamp duty), which, works out to be a pretty good rate of return on equity.
Cheers
M
I'm with you hwd- to a point.
i would love to be in a situation where i could renovate a property without the added pressure of trying to make a buck out of it. But thats only cause i love to renovate, and i'm damn good at it, but if you are able to make a profit dealing with properties that don't require a reno, or any work, that sounds pretty bloody good to me. As close as you are going to get to that elusive "money for nuthin" from Dire Straights
gecho
i would love to be in a situation where i could renovate a property without the added pressure of trying to make a buck out of it. But thats only cause i love to renovate, and i'm damn good at it, but if you are able to make a profit dealing with properties that don't require a reno, or any work, that sounds pretty bloody good to me. As close as you are going to get to that elusive "money for nuthin" from Dire Straights
gecho
bbg2003,
Selling costs in WA are basically the agent's commission and conveyancer's fee.
It's not possible to give generalised figures for the costs of renovating a place.
In my example, I've estimated around $2,000 to $3,000 for stripping out and disposing of all the old stuff (including the old kitchen cabinets, removing existing tiles, carpets, etc), $7,000 for the kitchen (includes new cabinets, tapware, stove, splashback tiling, etc), $3,000 for the bathroom (includes toilet bowl, cabinets, tiling, tapware, etc), $1,000 for flooring (includes sanding and varnishing, skirting boards, etc), $2,000 for built-in bedroom cabinets, $2,000 for electrical work (includes new light fittings) and $1,000 to $2,000 for painting (ie walls, ceiling and window & door frames - includes preparation).
My estimates include labour costs for installation and all materials. The costs could end up being more or less, depending on how much of the work you do yourself, and the quality of the new fittings that you choose.
Selling costs in WA are basically the agent's commission and conveyancer's fee.
It's not possible to give generalised figures for the costs of renovating a place.
In my example, I've estimated around $2,000 to $3,000 for stripping out and disposing of all the old stuff (including the old kitchen cabinets, removing existing tiles, carpets, etc), $7,000 for the kitchen (includes new cabinets, tapware, stove, splashback tiling, etc), $3,000 for the bathroom (includes toilet bowl, cabinets, tiling, tapware, etc), $1,000 for flooring (includes sanding and varnishing, skirting boards, etc), $2,000 for built-in bedroom cabinets, $2,000 for electrical work (includes new light fittings) and $1,000 to $2,000 for painting (ie walls, ceiling and window & door frames - includes preparation).
My estimates include labour costs for installation and all materials. The costs could end up being more or less, depending on how much of the work you do yourself, and the quality of the new fittings that you choose.
Hi everyone.
Just a quick 20 cents worth.
Geoff and Paul are jovial by nature. That is there style, and they enjoy what they do. My first impression was that they are the Laurel & Hardy of renovation.
Now, I don't don't work for them, nor do I have any affiliation with them. Of all the courses that I have attended over the years, theirs was the most down to earth and practical one, and value for money (this was 2 years ago so I not sure if it has changed).
Their workshop was my inspiration to get out and renovate. Over the years, both my new and reno properties have increased in value, but the reno ones have performed far better.
I too have a concern about using RE's valuations. However, I've noticed that these TV shows only like to show the good news stories, and I have learn't that there are pitfalls in this type of investing. Hence I have written a book that hopefully bridges the gap between theory and reality for newcomers. Visit www.renovateforprofit.com for actual examples.
Like any asset purchase, the key is to buy at a good price. Given the costs involved in renovating, this factor is critical. You profit when you buy, the rest is icing on the cake. If you are silly enough to pay too much, then bad luck.
My formula is to work backwards from the expected selling price/ value of the renovated version and deduct costs and profit margin to arrive at my ideal maximum purchase price. Any higher, and I walk away and look for the next one.
Obviously, if they have a team of tradies, it helps. As does it help if you are handy with a hammer.
One advantage that I see for renovating in the current climate is that it is a great way to increase value in a low inflation environment, and a great way to do so in a flat market.
Good luck to all
Sam Vannutini.
www.renovateforprofit.com
Just a quick 20 cents worth.
Geoff and Paul are jovial by nature. That is there style, and they enjoy what they do. My first impression was that they are the Laurel & Hardy of renovation.
Now, I don't don't work for them, nor do I have any affiliation with them. Of all the courses that I have attended over the years, theirs was the most down to earth and practical one, and value for money (this was 2 years ago so I not sure if it has changed).
Their workshop was my inspiration to get out and renovate. Over the years, both my new and reno properties have increased in value, but the reno ones have performed far better.
I too have a concern about using RE's valuations. However, I've noticed that these TV shows only like to show the good news stories, and I have learn't that there are pitfalls in this type of investing. Hence I have written a book that hopefully bridges the gap between theory and reality for newcomers. Visit www.renovateforprofit.com for actual examples.
Like any asset purchase, the key is to buy at a good price. Given the costs involved in renovating, this factor is critical. You profit when you buy, the rest is icing on the cake. If you are silly enough to pay too much, then bad luck.
My formula is to work backwards from the expected selling price/ value of the renovated version and deduct costs and profit margin to arrive at my ideal maximum purchase price. Any higher, and I walk away and look for the next one.
Obviously, if they have a team of tradies, it helps. As does it help if you are handy with a hammer.
One advantage that I see for renovating in the current climate is that it is a great way to increase value in a low inflation environment, and a great way to do so in a flat market.
Good luck to all
Sam Vannutini.
www.renovateforprofit.com
)Re:
>>post the table of contents
May be the author would do this.
Anyway i just purchased a copy. Will have a quick look tonight and post impressions tomorrow.
>>post the table of contents
May be the author would do this.
Anyway i just purchased a copy. Will have a quick look tonight and post impressions tomorrow.
Hi Guys
OK, here's the goss.
My wife Karmen is the IT guru, and she is extremely pregnant, so everything is a bit chaotic. We therefore apologise for the web hiccups.
We are currently getting the payment link set up online. Until then, please print off and fax order, as our site is not 100% secure.
When you do this, just write in that you are part of the forum, and I will offer the discounted member's price for the hardcopy.
As for the contents, we will endeavour to upload them asap. Meanwhile, click onto FREE reports button and have a look at the 7 golden rules doc. This will give you a fair indication of what the book is about. You can also click onto the 7 golden rules on the home page (next to the mug shot) and have a read.
Hopefully, we will have this up by tomorrow.
Regards
Sam Vannutini
OK, here's the goss.
My wife Karmen is the IT guru, and she is extremely pregnant, so everything is a bit chaotic. We therefore apologise for the web hiccups.
We are currently getting the payment link set up online. Until then, please print off and fax order, as our site is not 100% secure.
When you do this, just write in that you are part of the forum, and I will offer the discounted member's price for the hardcopy.
As for the contents, we will endeavour to upload them asap. Meanwhile, click onto FREE reports button and have a look at the 7 golden rules doc. This will give you a fair indication of what the book is about. You can also click onto the 7 golden rules on the home page (next to the mug shot) and have a read.
Hopefully, we will have this up by tomorrow.
Regards
Sam Vannutini
