Anyone renovating for profit?

Curious to know, now that it's all doom and gloom in the property world, and opportunities are present for those who invest counter-cyclically
is anyone renovating at the moment for resale in 12mths time?

I'm beginning to see some bargains that I wish I had the cash for..... now if only I hadn't seen a PPOR I liked so much last year

So, anyone? I think there's value in picking up some cheap western and northwestern suburbs property now and renovating, renting out and reselling when the mood's better in about 12mths time. Thoughts?

 

Jacque

I am very busy at work so I am not doing renos atm but I could buy 1 more IP without any hassles.
I see value in properties out west but I am a little concerned (like everyone else) about the future of our interest rates.
What properties are you suggesting I should be looking at?

Cheers

 

Hi Jacque...

Yep, that is our strategy exactly. Resale in the short term, bank the profits and put them into passive income producing investments..

DT

 

I'm not suggesting specific properties, but merely commenting on some of the recent sales I've seen (and am seeing) that indicate value at this point in time of the cycle. When compared to 2003/04 prices there's suburbs with half the stock reselling for less today, some five years later. Times are indeed tough for those sellers who bought in these heady boom years and HAVE to sell today. They may have their reasons (high rates no doubt amongst them) but one of them isn't an expectation that they'll get what they paid for or even break even. If they do, it's usually because they've added value to the property through improvements.

When I look at some decent suburbs and see houses (renos) on good sized land blocks (600sqm) selling for under $350K I think it's time to consider buying. Ditto with units- albeit different price brackets. There's simply some really good buys, I believe, but that's just my field opinion of course

Usual disclaimers apply!

 

Hi DT

Well we'd love to hear the details, if you will.
Suburbs, price brackets, plans implemented so far and any profits taken?
Look forward to your next post!

 

Jacque
Are your thinking of specific suburbs or are you only referring to specific distressed sales?
Do you have any examples?
Cheers

 

I have a good mate who makes obscene amounts of money from property development. Which I hate him for!

his main strategy is to purchase houses with potential or "character", renovate them and sell them for a profit.

say on a house/unit he paid $200K for, he hopes for a sale price of $260K. so he spends $20K renovating (sends in a team of tradies backyard blitz style), $20K is stamp duty and $20K is profit. on average he will hold a property only for 4-6 weeks.

the key to his strategy is the short holding period as this maximises his profits and frees capital up for his next investment and compounds his profits. you just have to ensure you don't over pay for the property in the first place.

This strategy is why I just can't see any financial sense in owning your own home. its a very strange time that we live in where a $20,000 renovation on a depreciating asset can increase a properties purchase price by $60,000. house of cards.

 

This technique works well when the markets are increasing
One of these days he will get caught with a renovated property that's worth as much as he paid for it if not less...

 

You make it sound so easy ... if it was everyone would be out there doing this.

No doubt your friend has invested a lot of time / energy to make his techniques work.

 

This only works with renos done on the cheap, as we found to our chagrin that nobody wants to pay for quality work. Which left us in an ethical dilemma: do we do work that we know is sub-standard but the owner won't know/care/recognise to maximise profit or do we do proper work, sleep soundly at night, but take less profit knowing that the extra work will go unrecognised?

When we did our current place, we spend sooo much time and effort stripping the bodgy slap-up paint job from the previous owners that the ethical part of me couldn't bear doing the same thing to other people. That makes us mugs I guess but we all have to do what we feel is right.

 

I guess you will have to find the balance
between ethics and a reasonably quick job to ensure profitability.

Cheers

 

generally speaking a property developer has no ethics lol.