Renovating as a career

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From: Michael Duffy


I am a builder/carpenter who specializes in home renovations I have been thinking about changing direction and start buying suitable property around 200k doing a sensible reno and resell for a profit.I would hope to do at least 6 jobs a year and keep 1 or 2 properties as I.P. I live in the NSW Southern highlands and would be looking for properties in the Wollongong or Campbelltown areas, I would be mighty grateful to any readers who could offer any advice,tips or there own experiences.

Michael
 
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Reply: 1
From: Glenn Mott


Hi Michael,

It sounds like a great idea to me and something I would love to do instead of working for someone else.

Unless you have the cash to buy the property outright and renovate it without a loan it would be best to keep your job/business going for a while.

A mate of mine came over today and said that you can do a gasfitter's course at tafe over a period of 1 semester. Places like Bunnings also do courses on things like ceramic tiling and pergola construction.

As with properties you wish to buy and hold, when looking at properties you should have a good idea of the median prices and rents for different home types (houses, units, flats) in the suburbs you are looking at.

Look for properties that are structurally sound - no walls falling down

Make offers so that the cost of materials and other tradesmen will be multiplied by at least 2 to get your capital gain (ie, don't spend a dollar to make a dollar, spend a dollar to make at least 2 dollars.

Strata and home insurance covers the cost of accidental breakage to toilet pans and shower screens (including installation) - hammers & pot plants drop all the time and soap is soooo slippery on the shower floor!

Learn a new skill each time you renovate.

Hope this helps

Glenn
 
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Reply: 1.1
From: Aaron Dwyer


On 5/9/02 7:22:00 PM, Glenn Mott wrote:
>Unless you have the cash to
>buy the property outright and
>renovate it without a loan it
>would be best to keep your
>job/business going for a
>while.

Is this where No Doc loans are useful???

Income from capital gains is still income.
--
Aaron Dwyer
~ To know and not to do, is really not to know at all.
 
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Reply: 1.2
From: Owen .


Glenn,

You don't have to pay cash for the property at all. I just factor all the costs, purchase, stamp duties, reno, interest over reno period, and then work out if it is a viable deal or not.

If it's a buy/reno/hold then your reno has to increase the valuation enough to ensure that you can get a post-reno 80% LVR refinance loan that is greater than your total purchase/reno and holding costs and that the interest on this new loan will be covered by the new rent.

If it's a buy/reno/sell then you just need to know how much profit you need to earn to make it worth you while and then work backwards from that to get your purchase price.

In both cases the reno needs to be done fast and effectively.

Owen

"Gambling promises the poor what property performs for the rich – something for nothing"
 
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Reply: 1.2.1
From: Daniel Brazdil


The Campbelltown area is currently increasing rapidly in price. The area is not bad but you will need to do your home work as to where you can buy cheap and renovate to obtain a profit. I suggest you look at the fibro homes in the high side of Campbelltown and also in Leumeah. Bradbury is an excellent position at the moment many of the older generation are moving out and the younger people are buying and renovating. Still possible to get a bargainn between 180-200 (very quick sales, get to know your estate agents, not many are returning calls at the moment) and can be resold for 250 when renovated (take into account your costs). With this sort of turn around you will need to be doing approx 6 homes a year, I suggest you consider borrowing for more than one at a time so that as the prices rise you will be ahead. The only warning is if the market slows many of the places of say 250K will then slump to say 225k, do your sums, you can always keep them.
 
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Reply: 1.2.2
From: Michael Keleher


Hi Michael
I am unfamiliar with your market but if I had my time over again in inner Melbourne I would not even bother to pick a hammer up.
The real money is made in the buying like most capers and the trick is to get good deals referred to you ie. from agents.
You will make more money by finding the best and busiest agent and establishing a business relationship with him/her whereby you give the property back to them for resale. You grow your business and they grow theirs.....the chance of making $10k over lunch should appeal.
Unfortunately the margin between the buy/sell price for renoes in inner Melb is now so low that buying is out of the question. Maybe a result of these tv real estate makeover shows ie spend $10k and boost the price by $90k....makes great tv entertainment.
Cheers Mike
 
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Reply: 1.2.2.1
From: Andy Duncan



I too would love to do this full time Michael. Like you I am in the building trade and see what can be done via renos etc.

I just completed a reno working on it after hours and it certainly takes its toll. I spent 10K and have had it revalued from 230K to 285K. As it happens I am keeping this one.

The biggest mistake I made was not factoring in my own labour which would have been worth around 10-15K. That is to say that in the time I worked on it I could have made 10- 15K working on other peoples properties.

SO I would advise you to include yourself as a cost.

I agree with Michael Keleher in that there is probably more money in sourcing deals etc as opposed to picking up the tools and doing it yourself. You only have a limited amount of energy and in my opinion the best way to spend it is to source properties and work on the structuring of the deal. That is only my opinion.

Having said that there is obviously an infinite number of opportunities to reno and sell houses for profit. We will never ever run out of houses. I'm sure with your determination Michael you will make many winning deals.

Andy
 
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Reply: 2
From: Denis Backhouse


G'day Michael,

Mate, I couldn't agree more.

Getting into doing your own renos is the most satisfying way to make a living I've found!

I was a full-time builder, and did "OK" over about 25 years, building my own places in my spare time, and then selling and doing it again.

Then the big "D" .. Divorce .. came, and I was left with just a little money, and a "what happened" feeling!

About that time, I met Geoff Doidge, who was still in the Qld Pubic Service at the time.

As well as helping me through the pain of an ugly divorce, Geoff took time to mentor me about property investment the way he was doing it.

The short story is that I took Geoff's advice, and the only mistakes I've made have been the ones I didn't talk to him about first!

Geoff is a contributor to this forum, from time to time (Geoff1), but I'm sure he won't mind my giving him a great rap here.

Geoff teaches thet there are only really three ways to make money in property ...

1) Buy well .. and he teaches dozens of perfectly ethical ways to do that .. No need to cheat old ladies out of their houses, like some seminars tell you!

2) Add value to the property .. Renovate, add a bedroom, subdivide and build another house or move one onto the block, amalagmate blocks into a unit site ... his strategies just go on and on!

3) And finally, make sure it runs positive. And even in that he's so clever! ... ALL your properties don't have to be positive ... But the portfolio OVERALL should be!

That is SO obvious when you are told, but how many of us miss out on a great capital gain investment because it won't run positive?

Go get another one that balances the ledger, says Geoff.

Duhhh! (Smack my forehead!)

Mike ... I work a lot with Geoff nowadays, and count him a firm and trusted friend.

If you are really serious about doing property renovation full-time, get to one of Geoff's seminars BEFORE you quit work. There are some VERY important steps you need to take before leaping out ... Like putting your lines of credit irrevocably in place while you still fit the banker's "squares".

Leave employment, and you become a bit of a worry to your financiers, and will find it hard to get credit when you need it most (Ask me how I know!)

You'll also meet all of the property-savvy professionals that Geoff surrounds himself with ... Accountants, Quantity surveyors, Town Planners, Mortgage Brokers, Solicitors.

I'd reckon my accountant alone, whom I met through Geoff, has saved me tens of thousands over the 5 or 6 years I've known him ... And he clawed back over $20 000 from the ATO for a mate of mine whose old accountant had missed a couple of very important things over the years!

Geoff only does about four one-day seminars a year, as he is too busy in the market to take much time out ... And he'll only do them in Brisbane. But loads of folk from NSW and Vic come to every one. And I met a bloke from Hobart just a few weeks ago who, after coming up to a seminar, swears the sun shines out of Geoff's fundamental orifice!

Have a look at Geoff's website ...

www.financialsuccesssystems.com

It's not pretty, but there's huge value there for anyone who's into property. Geoff is a great "giver"!

If you want to yarn one-on-one, give me a call on 1300 550 656.

Be glad to share what I've learnt from Geoff.

Best regards

Denis.
 
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Sim

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No more spam please Denis

Reply: 2.1
From: Sim' Hampel


Denis, while your enthusiasm is admirable, posting no less than four messages blatantly advertising Geoff's seminar in one evening is a little too much don't you think ?

Geoff no longer actively participates in this forum, and these are your first posts yourself, so forgiveness on the grounds of contribution is a little difficult. From memory, Geoff's "Hall of Fame" award you refer to in one of your posts was for contributions around 18 months or so ago.

While I haven't yet had the pleasure of attending one of Geoff's seminars (the one I was booked into was cancelled... which was disappointing, but Geoff personally called and apologised for having to cancel, which I did appreciate)... I have heard good things about what he has to say, and so am not disparaging Geoff or his seminars.

However, there is a place for posting this type of information Denis, and repeated spamming like this is not it.

Denis, please use Meeting Point to advertise seminars from now on.

sim.gif
 
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No more spam please Denis

Reply: 2.1.1
From: G D


Hi Sim

Thanks for pointing out to Denis the forum ettiquette (spelling?)

Denis I feel was trying in my absence to let people know of a very rare event...

Sorry if it offended you but I cant help but think that that there are so few seminar presenters that dont sell property...

I know the "big" gurus now do...

tho somewhat covertly...and almost always units/townhouses...

Ive noticed on the forum...if you can be bothered you can still slip your references in code eg...

"Does anyone know anything about the B.I.G 'Breaststrokers Investor Group' good or bad ...I hear they are having a meeting in... on ..."

Maybe some leeway should be given to those very few of us (long term educators and active investors) who are seriously educating the public

An oz style John T Reed rating of property purveyors??

Maybe I'm getting cynical...

After 8 years of seminars and 30 years investing...I've found there are so few straight seminar people out there...

maybe...

you have do have to shoot the piano player just to be sure you get the bad guys!!

ps...

Sim...its about time you got to Briz to check us out for yourself...it might just be enlightening...and profitable?

let Mohommad come to the Mountain...!!

Geoff 1
 
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