Tips For A Successful Renovation with Verse Property

Cherie Barber of Renovating for Profit says the most important decision anyone can make is to buy in the right suburb and spend time researching the area.

“At the end of the day if you buy a property that’s overpriced it’s hard to make up the capital gains,” Barber says.

“Anyone looking to renovate has to identify suburbs where renos will work and suburbs where renos won’t work.”

So how does an average renovator know where to find the best suburb and reap massive rewards? Barber says investors should become an expert on up to three areas and look for the ‘stepsister’ suburb in a good area.

“Where you have your lifestyle suburb, people want to buy in but don’t have the money. So buy the next suburb along, the stepsister suburb. Renovations work well in these suburbs.” Another crucial factor for renovators, Barber points out, is to buy in a suburb where there’s a large price disparity among homes. “You need to be buying low and selling high,” she added.

A common mistake renovators make is to buy a home without having a clue how much the renovation will cost, according to Barber.

Barber estimates a cosmetic renovation should be about 10 per cent of the total cost of a home. However, Renovate and Profit’s Ana Stankovic believes investors shouldn’t be too paranoid about numbers. “It’s about dollar figures and investors should aim to make more than $50,000 in clear profit.”

This rule is window shopping at its best. Professional renovators don’t shop in retail consumer land; instead, Barber advises shopping direct and getting materials as close to cost price as possible.

Doidge of the Reno Kings says investors should also try second-hand places.

“You want cheap, not nasty,” he says. “Some investors buy things on eBay for a fraction of the price you buy retail, others buy scratch-and-dent. A tenant won’t complain if there’s a scratch on it and it will be much cheaper. Other options include buying display stock and flat-packs.”

Eslick says the best ‘bang for your buck’ is to paint. “It lifts it and makes it look much better,” he said.

The two most expensive places are the bathroom and the kitchen, according to Eslick, but investors should ‘wing it’ where possible. “Sometimes you buy a house with an old pink bath, but if the bath is in good condition, why would you rip it out? If it has old-fashioned tiles, I would just paint the bath white and use a tile paint. That also gives you the best bang for your buck – they look fantastic.”

Investors can also wing it to cook up buyer interest in the kitchen. “One of the simplest ways to lift a kitchen is to put different handles on the doors,” he says. “If the carcass (what the doors swing off and the benches sit on) is okay, it’s easy just to replace the doors, or put new laminate on them.”

Barber likes to find ‘clones’. “Find stainless steel appliances that look good but don’t have designer price tags,” she says. It’s just like buying a fake Chanel bag. All you want is for it to look good because looks are more important than the brand name.”However, Stankovic warns using cheap, fake products are only appropriate in cheaper suburbs. “If you’re buying in a high-end area, you have to spend more,” she says. “If they see a cheap reno (in a high-end area) they’ll walk out.”

Barber says there are a huge number of ways to add value to a property by reconfiguring the layout. This includes changing the internal layout, segregating rooms, enlarging other ones and changing the design. She advises investors to aim for a maximum floor-to-space ratio. “If it’s a structural renovation it should cost 40 to 80 per cent of the purchase price.”

Eslick says those who don’t want to take out walls and make major structural changes should try to create an extra room wherever possible, and it’s often easy to turn a two-bedroom house into a three-bedroom home. “Finding an extra bedroom under the existing roof is one of the cheapest ways to add value to your investment home,” he says.

Cherie Barber of Renovating for Profit says renovators trying to improve a home to on-sell must know what their holdings costs are.“For example, my properties cost $235 a day to hold, so if I have a one-week blowout, it costs me $1000,” she says. “Know what your costs are, it will make you go much faster.”

This, of course, means tradespeople also have to work quickly. “Get the tradies to like you,” Barber says. “If they don’t like you, they won’t bend over backwards for you and will probably charge you higher prices.” There are simple ways to form good relationships. For example, Barber buys each tradie a coffee every morning (she even negotiates a bulk coffee cost with the nearest café and gets a waitress to bring all of them to the site every morning). She also buys lamingtons and organises a dedicated area for everyone to have meals and breaks together. At the end of a job, she gives her favourite tradies $20 lotto tickets as a token of appreciation.

Renovate And Profit’s Ana Stankovic adds that investors should never look for a tradesperson in the Yellow Pages. “The good ones are already booked out,” she says. “Find them through other renovators or specific stores, like a specialist plumbing store.” However, Reno King Paul Eslick has a slightly different strategy. He says investors should be searching for a handy grandpa, because someone who wants a bit of part-time work will be much cheaper to find than a professional. “Put an ad in the paper for a semi-retired qualified tradie with insurance who wants to work three or four days a week,” he says.

Barber says you only get one chance to sell your property, so extra money should be spent to create the ‘wow’ factor. “You have to style, it’s not negotiable,” she says. “Hire an interior designer. Create the illusion and sell the dream. People are looking at the furniture when they inspect a home, so it’s real estate suicide to sell without property styling.”

Stankovic says investors can get a few hints about how to ‘create the dream’ by going to open homes in their chosen suburb. “If you have a home worth $500,000, look at homes in the same suburb for $600,000 to $700,000. You’ll then see what look and feel is popular. Try and mimic that look in your own home.”

Real estate agents may know how to play the game, but that doesn’t necessarily mean they know how to appreciate the property the way you do.

Barber says investors should never rely on a real estate agent to sell a property for you, but instead, take matters into their own hands. For example, Barber does this by putting a little card in every single room with all the key features of that room. “I laminate it and stick it under the light switch in every room. Buyers come through and see the card, which might say ‘this room features under-floor heating, self-braking cabinets and a solid stone designer basin’. I list every inclusion on a room-by-room basis and by the time buyers get to the third room, they’ll start looking for the card.”

Barber also creates a buyer’s welcome kit, and suggests investors should do the same with a property they’re trying to sell. “I have a big red box beautifully wrapped which sits on the kitchen bench and says ‘for the new buyer’. Everyone wants to know what’s in the box. The agent tells them they have to buy the house to find out.”

Selecting the right colour scheme is imperative to achieve the look you want to create. Barber says investors should get a really good palette for both internal and external colours. Once you’ve decided on colours, develop a ‘cookie cutter’ approach. “I’ve been using the same colour scheme, the same stone kitchen and same carpets every time. It’s the old saying, ‘if it ain’t broke don’t fix it’.” She says many investors think they have to do something bigger and better on a second or third renovation, but they shouldn’t try to reinvent the wheel.