All Topics / Help Needed! / Renovation Advice Callout!

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of wits endwits end
    Join Date: 2005
    Post Count: 3

    Hi all,

    I am formulating a plan to wet my feet in the RE investment game. (Thanks in no small part to Steve’s books and this site.)

    I would like some advice on my high-level plan (Please be gentle, this is my first post!) So, here goes;

    Find a property that is undervalued due to cosmetic ‘problems’, but not structural.

    Hopefully arrange 90 day settlement with early reno access. Buy with 20% deposit to avoid mortgage insurance.

    Manage a group of trades folk to conduct the renos (v’s trying myself over weekends etc, due to timeframe. Trying to avoid monthly mortgage payments eating into profit.)

    Go to market on or soon after settlement.

    Note, the price range I am thinking is find an unrenovated home in the low 200K range which sits amongst homes in a 300K range… If I can find one ; )

    Question: I am fairly sure this plan sounds feasible. The key however will be what I renovate to make the difference between expense and return. I have listed a number of possibilities below I am considering;

    1) Find a two bedroom, two living area. Convert to three bedroom…
    2) Find a three bedroom with a very large main. Create an ensuite to main bedroom
    3) Find a queenslander with no balcony. Build one. (QLDers love their balconies!)
    4) Possibly a new kit kitchen with dishwasher
    5) Tile or carpet. I prefer tiles for QLDs hot climate. Is that the way to go generally?
    6) A lick of paint throughout
    7) An upgrade to the bathroom. This would be expensive though. What would most people advise is a reasonable expense for a bathroom reno? Say moderate size room.
    And getting a little creative… or crazy;
    8) security system
    9) connecting broadband to house
    10) connecting cable TV to house
    11) solar power heating? (save owner / tenant in electricity) or would this not improve value over cost, in your collective wisdom?
    12) Fancy ceiling lights. (These can be quite cheap and look great)
    13) security screens throughout
    14) landscape garden
    15) Tinted windows
    16) Air condition either main bed or whole house
    17) Insulate roof

    I am sure there are a million other ideas. Generally though, I would like to hear from experienced folk whether any of these ‘generally’ give particularly bad ROI, if any are particularly good, and of any other suggestions you may have.

    Thanks. It has been wonderful reading the posts on this site and nothing short of empowering hearing all of the motivating real life stories, challenges and successes. Heres to many more!



    Profile photo of wits endwits end
    Join Date: 2005
    Post Count: 3

    [cool4]So, to get things rolling… I have just read some more informative posts under the heading ‘renovate/sell (within 12 months)…i dont get it?’ where MichaelYardney and others advised that the buy,reno,sell strategy would not work in a stagnating market.

    Is this the general opinion? It seems to me that the main focus of the site is +’ve gearing properties, and that these can be very tough to find. So, using that amount of effort as a gauge, I would have thought that the ‘ideal’ reno home would also not be a pipe-dream in this climate? Tough, but perhaps no more so than finding a +’ve geared IP. Am I focusing on a bad strategy? ie. is my ‘fear’ a reality or just an obstacle? (I am considering a number of the strategies presented, but this is the one I see as being closer to my ‘niche’).



    Profile photo of gatsbygatsby
    Join Date: 2003
    Post Count: 708

    Hi wits end,
    You came up with some great ideas!
    I have never completed a reno to onsell so my advise may not be as successful as your determination, but here goes.
    If the carpet is in good nic, leave it. If it needs replacing then check if the floor boards are worth polishing without excessive outlay.
    Add a third room from what already exists, rather than adding onto what exits already.
    Upgrade the kitchen ’emotionally’ to the buyer with inexpensive ‘shiny’ tap handles, door knobs, etc from places like Bunnings (check for sales), rather than fund it from scratch.
    Definitely repaint if needed to give it a ‘fresh/larger’ appearance (very cost effective).
    Stipulate on contract if possible to have access to do reno work during settlement period, etc.
    I hammer a nail with a paint brush, so leverage the use of other trady’s time if more cost effective for you.
    Personally if you are doing a reno for a quick turn around, things like cable tv, broadband and solar heating I’d leave for buy and hold tennants other wise you may be overcapitalising and eating into your profits for the next reno?
    Landscape gardening doesn’t have to be a huge ‘backyard blitz’ outlay. Just keep it green and clean (concrete, etc).
    Others on this forum will have much better ideas, advice and personal experience to help answer your questions.
    Good luck!

    “Sometimes the hardest thing to do in life is often the best thing to do.”

    Profile photo of wits endwits end
    Join Date: 2005
    Post Count: 3

    Thanks Gatsby! Great to hear from you. Overcapitalising is what I want to avoid, without overpricing the place on sale, of course. I like the advice about the kitchen! I was wondering just how elaborate / expensive others go. I think thats what I’ll do on my PPOR. Just considering kitchen reno now, with option of keeping or selling soon.


    Profile photo of hellmanhellman
    Join Date: 2005
    Post Count: 109

    If you can buy at enough of a discount then renovation can still be way to make money. But it would probably be through equity (as buyers are demanding $$$ off before they commit).

    Also on small projects (say sub $400K mark) not overcapitalising is very important. As there is not as much margin and your buyers are acting on price to a degree (well at least in CBD/metro/suburban areas).


    Profile photo of jhopperjhopper
    Join Date: 2004
    Post Count: 278

    Hi Wits End,

    I like your plan and hope you are successful.

    A few issues you may like to consider and may want to search the forum as they have been discussed quite a few times already.

    Firstly, early access for reno’s can have a few pitfalls and would suggest you keep the cost of jobs performed to a minimum just in case the deal falls through. I would certainly use the time wisely in planning exactly what you are going to do by getting costs, tradies priced and ready to roll, approvals on the way if necessary etc. Not to say it shouldn’t be done, just be a little cautious!

    As for the projects you have suggested, a few great ideas in them and obviously will be case dependant. Personally, I love outdoor rooms and decks and add hugely to usability and aesthetic appeal. Unfortunately can be costly and depending on how high off the ground, may require council approval.

    I am also a fan of open plan and getting rid of walls to create more usable space. Just watch for load bearing walls and talk to a builder if in doubt.

    I am also in the process of doing a kitchen reno for family and, rather than gutting and starting again, I have found that I can replace the doors and benches for a reasonable price through a cabinet maker, a bit of paint and new appliances and looks brand new. All for about half the price of a new kitchen. Depends on the bones of the kitchen though.

    Anyway, all these things are great but what will be most effective is all the little things. Paint walls and ceilings, sand the floors, door handles, modern light fittings, curtains or blinds and tidy up the garden.

    lastly, take care with time, money and approvals. Time can easily blow out, as can budget. As for approvals, say no more. Good luck and hope it goes well.

    Profile photo of penguinchickpenguinchick
    Join Date: 2005
    Post Count: 38

    Hi Luke,
    when you are crunching the numbers take into account that If you resale in less than 12 months of holding property you are paying CGT on 100% if you sell after 12 months you pay tax only on 50% capital gain.Best to do cost analyses of capital gain tax saving against interest payed on borrowed money.
    Good luck.

    Profile photo of WitsendWitsend
    Join Date: 2005
    Post Count: 1

    Thanks everyone for the heads up. The info I have gotten from you is to ensure my project management (tradies, timing etc) is on the ball before beginning, watch for a tight contract especially if getting early reno access, CGT of 100% (didn’t know that one! Damn!) if sell in under 12 months, good kitchen ideas and not to overcapitalise. Beauty! Most of all, some encouragement that I am not crazy. Actually, as a first project, I almost don’t mind breaking even. Here’s hoping!

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