Hi, I am looking at doing renovations to earn an income (whilst still working 9-5). There is so much material out there about reno's, tips & tricks but I really want to know how profitable renovating and selling properties is - especially if you want to 'buy, renovate and sell' v.s 'buy, renovate and hold'.

Say the aim was to buy and renovate 2 or 3 properties within a year, how would one make a decent profit when paying capital gains tax... Is there a way?.... is it worth it!

I know people do it... but how.

Any help would be great.

Thanks.
 
Welcome!
Im afraid my answer is, maybe....

In a rising market, and for those that can renovate cheaply and quickly, it can be profitable.

Otherwise, its a great way of turning a large fortune into a small one.

Why did you choose buy reno sell as your strategy? Are you a builder/tradie?
 
Thanks!

Say you do find a property with potential and you renovate quickly and cheaply, is it still worth it when you have to pay capital gains tax (I wasn't interested in living in the properties myself, so I guess I would be paying the full amount of CGT) As I am new to renovations I would be starting with cosmetic renos like re-doing kitchen, bathroom and floors. No knocking down of walls at this stage.

The more I look into it, the more things I find that would eat at your profits - maybe there is something I am not getting? :)

I am trying to figure out how people are able to do renovations (buy and sell) as there pure source of income and still make a high profit after taxes etc.

I have been a buy and hold investor for a while, but wanted to try something else as well. Unfortunately I am not a tradie, but have contacts.
 
why dont you start with one of your existing protfolio then? next tiem the tenants vacate, do the reno, then test the market and see what offers you get. if you have had it more than a year the CGT wont be that bad, and you can see if you like the lifestyle.

I couldnt think of anything worse. Its bad enough having to do odd jobs around the PPOR for the boss.
 
Interesting, will keep that in mind. The only issue is that the current ones don't really need a reno. Hence looking for properties that needed a little TLC.

Doing it to an existing property is a good idea tho, as I will be able to see If I like it. I still want to know how people do 2-3 properties within a year and still make a profit.

Thanks for your help!
 
when your doing your due dilligence for the next 'fixer upper' have two end games. sell and take profit, and hold and rent. Make sure both stack up and then you are laughing.

Im not sure how others make money full time from reno's. id say they buy in a specific structure to avoid/ reduce CGT, and have teams of tradies and a fair whack of experience at doing reno's. Plus they have a good eye for picking a market that is on its way up.
 
Only people I personally know who made money from buy-reno-sell, all did it in a rising market.

I am yet to see a house sold THAT cheap, that you could make that significant a profit renovating it yourself, let alone with trades-people.

My buy-reno-hold's would only amount to about $10k in-pocket profit after all expenses. Hardly worth the time I put in renovating it me thinks. Dollar for time spent, I would rather pick up a part-time Thai delivery job, same profit, less risk.

However as a buy reno-hold, it free's up more substantial equity to play with I wouldn't have had otherwise.
 
My buy-reno-hold's would only amount to about $10k in-pocket profit after all expenses. Hardly worth the time I put in renovating it me thinks. Dollar for time spent, I would rather pick up a part-time Thai delivery job, same profit, less risk.

However as a buy reno-hold, it free's up more substantial equity to play with I wouldn't have had otherwise.

Thats interesting, I was coming up with the same sort of figure (10k), thats why I was curios to find out what other people did. Buy, renovate hold.... hmmm, does not sound to bad at all - increase value, increase rent, tap into more equity. Thanks for that!
 
Thats interesting, I was coming up with the same sort of figure (10k), thats why I was curios to find out what other people did. Buy, renovate hold.... hmmm, does not sound to bad at all - increase value, increase rent, tap into more equity. Thanks for that!

Someone's making money, don't take my word, you're best asking around and seeing what is missing from the equation.

The more profitable renos are at the higher end of the market, which personally I can't afford.

As for those reno-packages which teach you how to do it... some of the figures I've heard sound a little too far fetched to me, like the tv-shows where they hammer 3 nails in on-screen and off-screen there is a team of 20 guys waiting in the background to finish off the job who's wages aren't included.
 
I have seen a couple of buy-reno-sell for good profits around my local suburb (Western metro Adelaide), but the key to it that I am seeing is that these properties were bought WELL BELOW MARKET VALUE, 2 that come to mind recently- one bought for $250,000 which is $100,000 cheaper than comparable sales of other houses in need of renovation in the area, the other bought for $300,000 which again was $100,000 cheaper than comparable sales. I DO NOT KNOW how these properties have been bought so cheap? I've certainly not had any luck buying properties below market value. The only thing I can think of is that these buyers must be prepared to buy something no one else would touch -ie huge amounts of asbestos and huge structural issues, and I'm assuming these buyers are registered builders so they know what the realistic costs and time of these projects are.
 
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