Renovation Profits

[Melbournian]

Was looking at this utube video which is API magazine diary - and suprised at the profits she made renovating.

http://www.youtube.com/watch?v=FLqpCcAfya8&feature=related

... is a full-time investor and renovator. Her latest project is a house renovation down the road from the beach in Perth, which showed strong financial results.

Her total costs, including purchase and renovation, came to $2.4 million. On completion of the renovation, done mostly in five days, the house was valued at $3.5 million.

That is a fair bit.... 1 million in 1 month?

http://www.milliondollarmakeovers.com.au/

 

[zed_kid]

Was looking at this utube video which is API magazine diary - and suprised at the profits she made renovating.

http://www.youtube.com/watch?v=FLqpCcAfya8&feature=related

... is a full-time investor and renovator. Her latest project is a house renovation down the road from the beach in Perth, which showed strong financial results.

Her total costs, including purchase and renovation, came to $2.4 million. On completion of the renovation, done mostly in five days, the house was valued at $3.5 million.

That is a fair bit.... 1 million in 1 month?

http://www.milliondollarmakeovers.com.au/

What the fudge!!?? Tagged for later viewing

 

[Melbournian]

Anybody in perth used here before?

 

[Ms Jade]

Interesting site - thanks, Melbournian. One thing I noticed is that the 'after' figures seem to be based on a value rather than a sale, but looks like this may be because the renos are done for OOs who aren't selling.

The thing that really wowed me on a quick look was the timing for the renos. 14 days to do all that including new bathrooms is amazing!! If the house is worth enough I imagine that paying extra for her to do the reno may well be wirth the saving in holding costs.

 

[Melbournian]

yeah i had a look at that. Your property is only worth as much as a buyer would pay for it.

I have seen a lot of these renovation seminars and websites always showing yeah..this is how much it is valued but it's isn't worth anything if it isn't sold.

One seminar was i went costed their consultation at 5K and and using their tradies. But i haven't really seen any figures on how much they actually made.

 

[Ms Jade]

^You mean they had a seminar but didn't give you all the figures of the cost of reno, transaction fees, etc?

 

[Jane - Hotspace]

I think she's done a great job. I'm not sure if she made $1m or not but she's added huge value by doing some really clever things.

This is the type of reno I love - you can still make great profits in a short timeframe like this woman has. Rather than ripping everything out and starting again, she's investigated ways to resurface the existing surfaces to modernise and refresh. There are some amazing products and services out there for anyone looking at renovating on a shoe-string and doing it this way is often far quicker to do than a complete overhaul.

If you make the right choices, then it can look like you've totally renovated the property even though you may not have.

I had a client make $105k (figure based on registered valuation) in one month from a $15k DIY reno I helped them with a few years back (property was only originally worth $270k so a different type of property altogether than the one talked about here). So, I know its absolutely possible if you do the right things and you plan your reno well.

 

[ashalim]

http://www.milliondollarmakeovers.com.au/

I'm guessing that's Sasha DeBretton? I was looking for more info on her strategies as well

I had a client make $105k (figure based on registered valuation) in one month from a $15k DIY reno I helped them with a few years back (property was only originally worth $270k so a different type of property altogether than the one talked about here). So, I know its absolutely possible if you do the right things and you plan your reno well.

Jane: How about if I use contractors etc because I can't do any of the work myself. Would it still be profitable?

 

[Jane - Hotspace]

Sorry I should have said that $105k was gross. It was still an excellent result and worked out to around $90k profit after reno costs (this was a buy and hold deal).

To answer your question - Definately; if they paid trades-people instead of DIY, I estimate they would have had to spent around $25-$30k in total - so they would have still made $75k-$80k after reno costs in a month. Most people don't even earn that in a year!!

Paying professionals can work just as well as DIY in many cases. Although it seems up front to be much more expensive, consider the extra time it takes to complete the reno if you DIY, and the resulting additional holding costs because the reno is likely to take at least 1-2 months longer than if you paid others to do it for you. If your holding costs are $3,000 per month and the reno takes 2 months longer to DIY than if you paid tradies, you might as well have spent that $6k on professional trades-people (who will probably do a much better job anyway )

My best tips to making sure you profit from your reno:

• Buy well to begin with
• Spend 7-8% of pre-reno property value (sometimes more, sometimes less depending on location/condition/potential re-val of property)
• Reno your property to suit your target market
• Minimise your propertys' down-time (ie carry out the reno as fast as you can so that holding costs don't cut into your profit)
• Plenty of other things you can do but it's late and I'm turning off my computer now!

Hope that helps.

 

[Melbournian]

^You mean they had a seminar but didn't give you all the figures of the cost of reno, transaction fees, etc?

they did but honestly - i feel the prices are so inflated for the tradies and then they say hey the property is worth this much.

I feel that price of property is made even higher as it cost more to renovate or build. And the labour, transport makes Everything in Australia is highly priced - say floor underlay acoustic it can range from $30 per sqm. i can get it overseas at 1 per sqm. Bi Fold Doors 8-12K - i can get it 3.4K.

 

[Melbournian]

I'm guessing that's Sasha DeBretton? I was looking for more info on her strategies as well




Jane: How about if I use contractors etc because I can't do any of the work myself. Would it still be profitable?

Use contractors - u are going to need to do that. electricians, plumbers, builders. For demolition or carpet removal -you could try them too.

I always use the same electrician. he gives me a good price all the time 1100 for 26 downlights installed plus couple of powerpoints.

 

[Melbournian]

I had a client make $105k (figure based on registered valuation) in one month from a $15k DIY reno I helped them with a few years back (property was only originally worth $270k so a different type of property altogether than the one talked about here). So, I know its absolutely possible if you do the right things and you plan your reno well.

I believe the property is only worth as much as a buyer would pay. Valuations are hard to justify. They could come up with anything.

 

[Jane - Hotspace]

That's a relevant comment IF you're selling. However, in many instances valuers are used to reassess the value of the property and then the additional equity used to purchase the next property. Buyers may not take the valuation as gospel - but a bank sure will!!

 

[ashalim]

Thanks guys!

I'm planning to do a Buy-Reno-Refinance/Rent for my next IP...so i'm here picking up useful tidbits

 

[Melbournian]

Go for it - that's the only way to do it

 

[wobbycarly]

they did but honestly - i feel the prices are so inflated for the tradies and then they say hey the property is worth this much.

I feel that price of property is made even higher as it cost more to renovate or build. And the labour, transport makes Everything in Australia is highly priced - say floor underlay acoustic it can range from $30 per sqm. i can get it overseas at 1 per sqm. Bi Fold Doors 8-12K - i can get it 3.4K.

And how much will it cost you to ship these goods from "overseas?"

 

[Melbournian]

And how much will it cost you to ship these goods from "overseas?"

the prices were 3.4K landed (with GST, Duty insurance etc) and 1000sqm of underlay (not low grade underlay 5mm-6mm acoustic ones) would be around $800 shipped (no GST on $1000 below)

Did it a couple of times already but only once with the doors (then again it helps that i have contacts and i speak and write the language).

If you are comparing apples to apples.. .say a panasonic LUMIX camera costs 550 here in Aus.. u buy it from hong kong off ebay delivered for $375. End of the day - everyone is looking to save money or spend money wisely.

 

[wobbycarly]

the prices were 3.4K landed (with GST, Duty insurance etc) and 1000sqm of underlay (not low grade underlay 5mm-6mm acoustic ones) would be around $800 shipped (no GST on $1000 below)

Did it a couple of times already but only once with the doors (then again it helps that i have contacts and i speak and write the language).

If you are comparing apples to apples.. .say a panasonic LUMIX camera costs 550 here in Aus.. u buy it from hong kong off ebay delivered for $375. End of the day - everyone is looking to save money or spend money wisely.

Done that.

 

[Perp]

Are you all licensed builders? If not, how do you manage to do these renovations legally?

Or do you, as many seem to do, renovate illegally and hope that the authorities continue to turn a blind eye? If the latter, are you not concerned about exposing yourself to litigation?

 

[Melbournian]

Are you all licensed builders? If not, how do you manage to do these renovations legally?

Or do you, as many seem to do, renovate illegally and hope that the authorities continue to turn a blind eye? If the latter, are you not concerned about exposing yourself to litigation?

All or any of my renovations structural are done with a builder and building surveyor with a permit from the respective council.

in the past - i did do painting and floorboards but these are comestic and i don't do this anymore. as my painter is quicker and more cost effective

i think you're confusing yourself.i'm a white collar worker in a different field. i only source these items and get the builders to install them. Just like how you would go to bunnings to pickup an item. Only thing is i find it cheaper to source them elsewhere. all the items too have the respective certificates from mutual recognized laboratories on australian building standards from NATA.