Our first reno project

Today we had an offer accepted on a 3 bed, 1 bathroom house in Noble Park Nth. It is 2 weeks to the day since we attended Steve's seminar in Melbourne, and it certainly helped motivate us to action.

I thought  I would try to keep a sort of online diary of the project here so everyone can help us out with ideas, and so others can learn from our experience also.

So the details of the deal are: (note that I will exlude some exact details until the contract becomes unconditional)
Address: 11 Bellvue Ct, Noble Park North, Vic
Have a look!
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103660130&f=10&p=10&t=res&ty=&fmt=&header=&c=6889657&cc=au&s=vic&tm=1180867332

House: BV, 3 bed, 1 bath, 1toilet, BIRs, new kitchen, pretty new bathroom, big deck with spa.
Purchase Price: mid $200k's
Reno Cost: $25k
Total Cash in: $56,624.00
Expected Profit: $15,726.00
Project length: 4months

Our Plan: Full repaint, new door handles, down lights and light fittings, light switches and power points, new floor coverings throughout except bathroom, new taps, new oven & rangehood, new toilet, timber venetians to all windows, render front of house, re-spray roof and driveway, gut front garden and re-do, trim and revive back yard, new lazerlight to deck.... and a few other things.
Basically to transform it from a sound but tired house into modern looking, clean and fresh home oozing street appeal, and with a couple of Wow! features.
The fact that the kitchen and bathroom need very little work is a huge plus, and it means we should be able to do a lot of work with the $25k reno budget.

That's enough for a start. Please tell me what you think.

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Looks Great.
Looking forward to see how you go.

Mon 4th June
Today was getting a couple of loose ends sorted:
-took out insurance on the house.
-appointed a solicitor and gave their details to the RE Agent for conveyancing purposes
-made an appointment with REA to go back to house tomorrow and measure all windows etc so we can start organizing materials and quotes.

Hi Hopeful67, thanks for replying. Are you from this area??

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Hi Jase and Flic,

Have only just started looking at property investment.  Have read Steve's third book "0 to 260+ Properties in 7 years" which has motivated me to get of the couch and do something.

I'm from Victoria and found your "diary" interesting, as its how I am planning to move forward with my first investment.....

Teus 5th June
- called a couple of renderers and a tiler to get rough per metre estimates.
- went back to the house to measure windows and everything else. Started on the outside as the agent was not there, called him when he was 15 min late and he had forgotten, so I could not get inside the house.  Still, I measured up all outside, and have a pretty good idea of inside so should be able to estimate most things. Will probably have to make another appointment soon to measure inside.
Hopeful67, where in vic r u? We are in Berwick. Looked in Mulgrave for houses for a couple of weeks and made an offer on one but got rejected. Then started to expand the search a little and found the one in Noble Park North.

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Hey Jase and Flic,
Keep up the good work!!
I wish you every success, Noble park aint a bad area to start.

Luke

Hi locco
Thanks for the reply. Do you live in the Noble Park area? I might be needing a builder sometime soon!!

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Good luck....rendering is brilliant, adds instant value to the house...

Check out my IP website (Property Investing in Australia), now at:
www.ozpropertyinvesting.com.au

I know nossing!

Hello Jase and Flic,

Yes i live near the area, bout 15mins towards Cranbourne. Need a builder drop me an email.

Cheers

Wed 6th June
-asked a carpet layer for a rough cost on 3 bedrooms
-typed a list of window sizes so I can buy blinds while on sale at Spotlight.

Yes, I did very little toward reno today. Working at this J-O-B seems to make it quite difficult to get things done. Now if I could just find a way to pay the bills while I wait for the Reno profit to come through......

Hi Handy Andy. Rendering the front is part of the plan. Probably just paint the rest.
Hey, check out this link to see what sort of final product I am aiming for:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103744866&f=20&p=10&t=sol&ty=&fmt=&header=&c=10859477&s=vic&snf=rbs&tm=1180697085

Thanks for responding locco. How is business?

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Hey Jase and Flic,

Just thinking...
To render whole house you are looking at about $38m2 with colour in the mix, this is the best form of render as it doesn't need to be painted and holds its colour. What are the rest of the houses facades like??? maybe just rendering the front with a 2 tone affect and a feature pergola or structure to break up the front and give it a visual wow!!
Busines very busy but always looking for more,
That is the joy of renovating, the possibilities are endless yet can be achieved at a sensible price.

Keep up the work!!!

Luke

Thur 7th June
-called agent to make another inspection time next week to get some quotes done, eg carport, render, etc.
-asked agent to fax contract of sale to mortgage broker
-got prices on floating timber floor.
-visited Lysaght Home Improvement showroom to inquire about carport. I reckon they will be expensive.
-orderd timber venetians from Spotlight. Whole house for $1252. Might need some trimmed and fitted still though.
-did some research on furniture rental

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

When looking from the front, the left side is painted white, right side not painted, rear of house painted purple and yellow with the heritage green deck.
I think rendering everything will cost too much. Need to repaint back and left side. Render front and small return. So then right side will be only thing not painted and will probly look weird.

Does anyone know if you can just put a skim coat of sand & cement over bricks, just enough to fill mortar joints up to flush, then apply a roll on texture coat over that?? I think it would look almost like render, but maybe lots cheaper.
Anyone tried this??

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Fri 8th June
-confirmed appointment with Lysaght for carport quote
-booked quote time with a painter to spray paint roof and driveway.
-visited electrical supplier for prices on downlights, power points, light switches etc.
-visited Good Guys for price on freestanding oven
-visited Solver Paints to ask about texture coating systems, paving paint, and prices.

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

all the time. looks the same. costs about $20 for 3 bags of render and takes about a day. I found it easy when doing handfuls, forcing render into the joints with a gloved hand cupped upward. tried using a float but too messy / hard.

www.posigear.com.au
Positive Geared Share Investing

Sat 9th June
-Spent morning with business partner, signing trust deeds, company constitutions, minutes of meeting etc and then went and opened bank account for the new structure.-2hours sitting in bank, yay, fun.
-went to get prices on bricks and pavers
-went to tile shop for a browse

Had planned to look at some more houses, but bank took longer than expected.

Crashy, thanks for reply. Do you buy actual render in bags, or just sand & cement mortar?

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

Hi Jase&Flic what was the exact price that you settled on the property with? I put a photo up here so I don't lose it and also downloaded all the other ones onto my hard drive as it will be interesting to follow this thread and thanks for putting the details up. What is the land area of the block? What sort of loan did you get PI or IO and do you plan to sell it within 12 months or after?

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HI Jaffa
The loan application is still going, so I will put up those details when the loan is approved and the contract is unconditional. It will probly be about another week.
The land size is about 590m i think. No scope for development, so just a straight out reno.
We plan to have it on the market 2 months after settlement at the latest.
Cheers

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

"House: BV, 3 bed, 1 bath, 1toilet, BIRs, new kitchen, pretty new bathroom, big deck with spa.
Purchase Price: mid $200k's
Reno Cost: $25k
Total Cash in: $56,624.00
Expected Profit: $15,726.00
Project length: 4months"

Hi Jase and Flic,

My in-laws live in Noble Park;  I think long term it will a good option as it is near the Monash Freeway and undervalued; a bit of a low-socio-economic area in the past, hence the cheaper price ranges. It definitely needs a revamp to get rid of all those horrible orange and brown brick cookie cutter houses from the 60's-70's.

But I have a few questions: 
Is this the estimated gross or nett profit?
what are fully renovated similar properties selling for in the immediate area?
is your estimated sell price likely to be the same as the others?
what are brand new similar houses selling for in the immediate area?

Don't forget that the profit will be liable for tax on 100% of the cap gain if you sell within 12 months. You could lose half the profit to tax.
Have the buying and selling costs, plus all other costs such as loan interest and fees for 6 months (or more if sale takes a while), legals etc been factored into the gross profit?
With an estimated profit of $15,726.00 (I'm assuming it is gross profit here) there won't be a lot left over. If it is gross, and you have to then factor in all the associated costs and tax, the nett result might be less than leaving the $56k in a high interest bearing deposit account.

Cheers,
Marc.
erardent@hotmail.com

"we get sent lemons; it's up to us to make lemonade"
www.whydoislice.com - for all the golfers out there!

Mon 11th June
-Itemised the tasks to be done and estimated time needed for each- Total estimate 53.5days work for 1 person, not counting the hired trades eg electrician.
-arranged the list of jobs into an approximate order
-Did some detailed costings on certain jobs to see which way is cheaper.

Hi Marc, good questions.
"Is this the estimated gross or nett profit? - Gross, ie before tax
"what are fully renovated similar properties selling for in the immediate area?" - Nicely done properties, inside and out $325-$335k, only inside renovated High $200s
"is your estimated sell price likely to be the same as the others?" -our estimated sale price is $308k, which I think is very conservative, perhaps too conservative, but as we are new to renos, I don't want too expect too much. I think our final product will be- Inside, very good. Outside Excellent. Our main drawback may be that we probly cannot afford a carport, though we are getting a quote, so maybe.
"what are brand new similar houses selling for in the immediate area?" - I have not actually seen any new ones
"Don't forget that the profit will be liable for tax on 100% of the cap gain if you sell within 12 months" - yes, all of the profit is taxable
"Have the buying and selling costs, plus...been factored into the gross profit?" - Yes, we did an expected scenario, then a best and worst case, and then looked at what happened if we had to hold for 12-18months and rent it out. This is not what we want, but would still not lose money, just not make too much
"With an estimated profit of $15,726.00 ... the nett result might be less than leaving the $56k in a high interest bearing deposit account" -
$15k profit for $56k down is 26.8% over 4-6 months. If we do 2 in a year that is 53.6% gross return on investment.
If I earn profit from a term deposit or similar, the entire profit will be taxable, so no different in regards to tax.
I have not seen any "high interest bearing deposit accounts" that earn anything like 53.6%p/a. Some share funds probly do, but right now I am concentrating on learning about property investing. Maybe I'll look at shares later.

Keep those replies coming everyone

He is no fool who gives what he cannot keep to gain what he cannot lose. - Jim Elliot

It still pays to assess your projected sale price against others in that price range. Ultimately, your house will be competing for buyers against properties such as these:

Houses:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104002398
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103984190
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103966164

Townhouses:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103878775
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103978494