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The pitfalls of renovating

Renovating property can be very fulfilling and financially rewarding but it’s not without its challenges.

There is much to consider in the renovation process and getting just one aspect wrong can be potentially costly.

These can include:

Getting your re-sale price wrong

If you are renovating a property to sell it within a short timeframe, it is critical to understand what price you can realistically expect to achieve once completed. Over estimating the end sale price can potentially erode all your profits. This research should be done before you even buy the property, helping you to determine the type of renovation you should carry out and the initial purchase price.

Not understanding the full scope of works

Understanding the full scope of works enables you to determine your renovation budget and schedule. This research should be carried out well in advance of any work commencing, ideally during the settlement period. If need be, work with your builders and/or trades to determine what needs to be done and what it will cost to do.

Getting your budget wrong

Renovating a property to sell or hold for increased rent should be viewed as a business. Too often, people get carried away with the idea of creating a beautiful home rather than viewing the process as a business transaction. There are many financial costs associated with renovating a property and they all need to be accounted for when working out whether a project is financially viable. For example, many people often forget to allow for aspects such as holding costs (finance, insurance, utilities) and selling costs (styling, agent’s commissions, marketing) which can significantly impact on their profit.

Not understanding your end buyer (and renovating accordingly)

Knowing who your likely end buyer will be allows you to renovate the property to their needs and gives you the best chance of a quick sale and a good sale price. For example, the buyer of a two-bedroom unit in the inner city is going to be looking for very different property attributes to the buyer of a family home in the suburbs. You need to renovate accordingly.

Not having a great team of tradespeople

This is particularly important for people like me who are good project managers but don’t know one end of a paint brush from another! Tradespeople who don’t understand (or care about) the budgetary and time constraints associated with renovating within a short timeframe can be a massive impediment to your renovating success.

Karen

xx

#flipping #renovation #renovating #rainmakerproperty #renovatingforprofit

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