Jewel,
I wish you all the best with this endeavour.
You have some great advice in there.
I would offer a few points for you to consider:
- Establish a budget and respect the budget – if it can't be done within budget, don't do it.
- Renovating (I reckon) is fun, but keep the emotion out of it, its essentially a large transaction.
- Have a plan for how time and money will be spent. Both are difficult to come by.
- Research what the market wants, it may not be what you like.
- Keep it real. Building is occasionally fraught and requires a sense of humour.
- Respect the trades. A cup of coffee in the morning, or a slab of beer for a job well done will bring good will.
Thanks Jac! All goods points again. Once again, I am saying to hubby, "Jac suggested", lol. Well I may not to get to put into practice what I have learned just yet. The owner rejected our first offer, which is not a big surprise. But they seem insistent on not moving on price. The unit went to auction and was passed in, that was 2 months ago. We went to the open house and the only people there was us and the next door neighbor! They think it is the tenant is making the place look bad. Nothing to do with the 1000 other problems with the place, lol.
Thanks Christian, I have printed out your post and put it on the wall. I like things that helps keep me focused on the end goal.
Jewel47 wrote:Thanks Jac!You're most welcome
Jewel47 wrote:They think it is the tenant is making the place look bad. Nothing to do with the 1000 other problems with the place, lol.Ah well you need to create a report from rpdata (or equivalent) showing recent sales for properties comparible to this one. Put a clear heading on each – handwritten – in texta – so it stands out like a sore thumb. There should be pictures illustrating condition of said comparible properties, what they sold for, and when. You cannot accidentally on purpose leave it in the unit for the owner to see, since he doesn't live there. Shame. Ask the agent to show the report to his/her vendor in an attempt to open the lines of discussion.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
christianb wrote:Jewel,I wish you all the best with this endeavour.
You have some great advice in there.
I would offer a few points for you to consider:
- Establish a budget and respect the budget – if it can't be done within budget, don't do it.
- Renovating (I reckon) is fun, but keep the emotion out of it, its essentially a large transaction.
- Have a plan for how time and money will be spent. Both are difficult to come by.
- Research what the market wants, it may not be what you like.
- Keep it real. Building is occasionally fraught and requires a sense of humour.
- Respect the trades. A cup of coffee in the morning, or a slab of beer for a job well done will bring good will.
I like the last point. You would be surprised the amount of people who never offer me nothing! Respect goes a long way
Hi Jewel,
Good luck with your venture and if you need anything were all here to help.
My wife and I (I was working in real estate at the time) did our first RENO project last year, We settled in our IP on JAN 2011 and we sold the property in JULY 2011.
Our net profit was 20K after all expenses, taxes, reno, agent fees, settlement "etc".
The biggest lesson I learnt was this:
• Most of our net profit was generated from "not from increasing the value of the IP through RENO" but from the purchase price.
• The property was listed for 280K through an Genmen agent and i managed to by the property for 220K in the hoppers crossing area.
• Doing research on the property it was realistically worth 250K. We spent 10K Renos and we managed to increase the rent from 250 to 300 a week.
• At the start my wife and I did allot of the work, but their are some very good tradies out there who need like anyone else the extra cash, We bought our Kitchen from bunnings and a trades person I knew installed it for $300.00. We saved allot of time and one by out sourcing
Rather than spending money on RP data "etc" just go to opens in the local area, See how many people go to the open, compare each home, compare renovated homes to renovated homes.
I live in deer park (Melbourne) and I go to a few opens every month just to keep an eye out on the market, One thing I have noticed in this area is this, just say I saw 10 houses in the area, 5 where renovated and 5 where original, the price difference between both types of homes was much of a mucheness, The reason was this; most people in the area are in the process of renovating their homes, so there are allot of homes on the market that have just been renovated but then on the other hand the houses that are not renovated are selling quick, houses in deer park usually sit on large blocks and the house usually sits in the middle, So what people are doing in the area is knocking them down and building three town houses instead.
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Hi Jewel,
Good luck with your venture and if you need anything were all here to help.
My wife and I (I was working in real estate at the time) did our first RENO project last year, We settled in our IP on JAN 2011 and we sold the property in JULY 2011.
Our net profit was 20K after all expenses, taxes, reno, agent fees, settlement "etc".
The biggest lesson I learnt was this:
• Most of our net profit was generated from "not from increasing the value of the IP through RENO" but from the purchase price.
• The property was listed for 280K through an Genmen agent and i managed to by the property for 220K in the hoppers crossing area.
• Doing research on the property it was realistically worth 250K. We spent 10K Renos and we managed to increase the rent from 250 to 300 a week.
• At the start my wife and I did allot of the work, but their are some very good tradies out there who need like anyone else the extra cash, We bought our Kitchen from bunnings and a trades person I knew installed it for $300.00. We saved allot of time and one by out sourcing
Rather than spending money on RP data "etc" just go to opens in the local area, See how many people go to the open, compare each home, compare renovated homes to renovated homes.
I live in deer park (Melbourne) and I go to a few opens every month just to keep an eye out on the market, One thing I have noticed in this area is this, just say I saw 10 houses in the area, 5 where renovated and 5 where original, the price difference between both types of homes was much of a mucheness, The reason was this; most people in the area are in the process of renovating their homes, so there are allot of homes on the market that have just been renovated but then on the other hand the houses that are not renovated are selling quick, houses in deer park usually sit on large blocks and the house usually sits in the middle, So what people are doing in the area is knocking them down and building three town houses instead.
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Hello Johann,
You make some really good points. If you don't mind me asking, how were you able to get the house for $220? The reason I am asking is because we made an offer, yes it was below asking, and the owner just rejected it. No counter, just a no.
So buying well is really the key and Reno would be the icing. I have seen dumps go for a great price just because the buyer wanted to knock down and redevelop. Some houses have been marketed on the appeal of the block size for redevelopment. It seems that you can't even buy a dump without paying an arm and a leg these days.
Thanks!!
Hi jewel47, which suburbs in melbourne are you looking to buy in?
Hello, I am looking in the northern suburbs of Melbourne.
Hi Jewel,
Don't get fixated on t he one property. If the vendor is not going to budge – send a letter to real estate agent formally advising you will withdraw the offer in X days and will make an offer on another property.
You have gone through a huge learning experience with this first property – use it to your benefit and keep shopping. The number of buyers will start to dry up soon as Christmas approaches and you find you start to have an advantage in negotiations, particularly with other vendors.
Thanks Derek for the encouraging and helpful words. I just wanted my first deal to happen. All of the build up an excitement and then someone burst my balloon, lol. The offer was submitted with a 24 deadline which has long passed. Hubby and I went to a second viewing of a house that we are interested in. Well lo and behold, a few hours after the viewing I get a text from the agent that a second party is interested in house and they would hate for me to miss out, lol. I am green but even I am NOT that green, lol. The funny part is that it is no need to play that game because we were going to be putting in an offer anyway and I don't care if 50 people are interested we won't be going over our budget. I think they maybe trying to get me in a bidding war with myself. I wish there weren't so much game playing.
Well got another text saying the other party put in an offer at asking price and would I like to counter. I said I couldn't counter at that price. On to the next property!
Text? The agent is dealing with you via text? What a whimp! He/she should call. Then you can be blunt about the situation. You are the ONLY player at the table, the property HAS NOT sold (the exclusive management authority is usually only 12 weeks by the way so they either have incentive to stop mucking you around and get down to business, or risk losing their commission). Not entirely sure what the etiquette is after 12 weeks but I would think you can contact the owner directly. You will already have seen the section 32 so you have the name and address of the owner and whitepages online might just turn up the phone number. Just sayin' ….
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Jpcashflow wrote:The biggest lesson I learnt was this:
• Most of our net profit was generated from "not from increasing the value of the IP through RENO" but from the purchase price.
I think this is the quote/lesson of the month. Very simple notion but it is often overlooked when people are wanting to purchase and make quicker CG.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Haha the agent text you? That’s unprofessional! Why don’t people just call these days?
You got fire Jac, lol. To be clear there are 2 properties Property A, the fixer upper with buyers stuck on their asking price. Property B that suddenly got an offer on it just hours after we took a second viewing. I didn't think it would be this tough getting a good property. Hopefully as Derek said, fewer buyers will be in the market as we get close to Christmas.
Think there is a very good chance that the agent will contact you in about a week saying the original deal fell through due to the party (that never existed in the first place) not being able to obtain finance.
Cheers
Tom
Jewel47 wrote:You got fire Jac, lol.Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Getting to the exciting bit now!!! Good luck.
When renovating IP's you need to remember the ONLY reason to renovate is to make money, in the form of equity and/or yield.
If it doesn't increase one of those don't do it.
Scrub your "nice to do" things off, especially for a first reno. It's too easy to go over budget. I had the opposite problem with my current reno as it will be our new PPOR. Hubby wanted to to the same reno quality. Hubby couldn't understand why I couldn't run to the light shop and buy ALL the house lights in an hour (like I normally do). It's been fun but more challenging.
We aim for $3 gain for every dollar we spend as we do most of the work ourselves. If we were not doing the work I'd be happy with $2 for every dollar.
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