Renovating inspiration - where do you get your ideas from?

[NESW]

We are planning on renovating an existing older style 3 bedroom home in a first home owner area on a decent sized section.

Previously we have re-carpeted, re-curtained and painted the interior of the property and replaced the oven, but as tenants and time have moved on and the market moves upwards, its time to have another go.

I have checked out hardware store kitchens and tile shops, but would be interested in hearing where others get their inspirations from.

At this stage we are looking at renting the property out for another 12 months and hopefully will list it next summer as the market in the area continues to strengthen.

The renovations I am thinking of undertaking and that I believe will increase rental return by another $40 per week with a view to attracting a better type of tenant are:

replacing the existing kitchen cabinetry that dates back to the 50's, tile and replace the bathroom and toilet with new fittings and fixtures, another internal paint job and an external one on the blockwork, lifting the carpet and vinyl in some areas and polishing existing floorboards, and re-fence the property both at the front and back. Most of this work we can complete ourselves so its just materials with the exception of the kitchen.

We thought we would re-roof and replace windows at the front when getting ready to list the property. Should we install a heat pump now as well for a tenant to fiddle with?

Any other thoughts?

[Shane D]

I would look on Trademe for renovated homes for sale or rent in your area. Then go and visit and get ideas. In my area, there are a lot of houses for sale by student's of "Property Tutors". They seem to renovate houses very similar (must be the Property Tutors renovation system). They all use the same kitchen design, colour schemes and bathrooms. They look very trendy and modern.

If I was renovating, I would replicate what Property Tutors does.

Shane

[Bluekiwi]

Yeah I have been looking at those properties on line myself Shane and they are staging them magnificently.
So much so, that I am copying photo's and have a file for when I start doing a bit of flipping myself next year.
I asked one of them who does their staging but he didnt reply, I see there little car's all round south auckland.

If the OP is in Auckland, and hasnt left yet.
I suggest he see's Amanda Sawkins my "Designer", that someone from property talk put me on to.
She is pre genius at a reasonable rate and has done both my old PPOR and my new PPOR.

She comes up with the colors and idea's, and then all you have to do is employ the tradesmen to do what she says to do.

[Ahar]

.
............I suggest he see's Amanda Sawkins my "Designer", that someone from property talk put me on to.
She is pre genius at a reasonable rate and has done both my old PPOR and my new PPOR.

She comes up with the colors and idea's, and then all you have to do is employ the tradesmen to do what she says to do.

BK, was talking to Amanda the other day.......giving me some much needed advice with a colour scheme...... and it turns out she is moving into staging properties

She's had such a lot of people asking for this service that she has decided to bite the bullet so to speak.

I should think anything she does will look stunning

You might need to give her a call.....Home: 478 3820, mob: 021 625581

I think she trades under the name of "Home Theme"

[Bluekiwi]

Aha.....rrrrrrrrr............

It was you, I knew it someone from here, who put me on to her.
She is brilliant, thanks for that.

If she is moving into staging, that is vundabar !!!!!!!
As I will need someone next year when I start my flips

[Ahar]

BK ......just realised that the properties that you've been looking at online are probably Amanda's work.

Her business partner is a member of "Property Tutors" and is flipping a house every couple of months.

And of course Amanda is doing the staging of a number of these Property Tutor houses.

[Davo36]

Ok, so can we see some pictures of these staged houses?

[Shane D]

Yeah I have been looking at those properties on line myself Shane and they are staging them magnificently.
So much so, that I am copying photo's and have a file for when I start doing a bit of flipping myself next year.
I asked one of them who does their staging but he didnt reply, I see there little car's all round south auckland.

If the OP is in Auckland, and hasnt left yet.
I suggest he see's Amanda Sawkins my "Designer", that someone from property talk put me on to.
She is pre genius at a reasonable rate and has done both my old PPOR and my new PPOR.

She comes up with the colors and idea's, and then all you have to do is employ the tradesmen to do what she says to do.

BK,

It's uncanny how close our investing thought processes are. We could be long lost twins . I have been doing the same as you and have been copying Property Tutors photos in preparation for doing a few renovation/flips next year. The staging makes SO MUCH difference. It really stood out for me when I saw an empty renovated house for sale with one agency and then the same house staged and for sale with another agency. It looked almost like another house in it's staged condition.

Speaking of next year, have you seen the new blog post from John Bolton at Squirrel Mortgages http://www.squirrel.co.nz/auckland-p...set-stabilise/. I agree with John and thus I am of the opinion that the new LVR rules will really start hitting the market hard by Feb or Mar and we could see a return to a buyers market in South Auckland. The reason being, that South Auckland house sales are dominated by first home buyers and investors, and both are hurting like hell under these LVR rules.

Should finally be come good buying again.

I think there will be great opportunities to buy a house at good prices and offer "vendor finance" at 10% deposits to first home buyers. I would add 2% to the loan terms (i.e. if i was getting 6% from the bank, i would offer 8% to the FHB) and then a good margin on the overall price. There is a really good chapter on this in Steve Mcknight's book "0-130 Properties in 3.5 years". This system would work well with a GST registered company as you are getting back 15% GST after you purchase and the house remains in your company name until the FHB pays you out in full and the title is transferred into their name. This is a cashflow strategy so you wouldn't enjoy he benefits of the rising market and hence may be too much work for too little gain. But a strategy that may be something to think about with so many FHBs not being able to come up with 20% deposits but still desperate to get a foot on the property ladder.

Shane

[Shane D]

Ok, so can we see some pictures of these staged houses?

Davo,

Property Tutor students focus on Mangere in South Auckland. So if you go to Trademe and punch in Mangere you will see a lot of them. I think they be having trouble selling them now the LVR rules are biting First Home Buyers. They are advertising 3 bedroom houses in Mangere for $450,000 (there abouts). I would guess they are buying tired old houses for around $350,000.

A few examples below

http://www.trademe.co.nz/property/residential-property-for-sale/auction-660359757.htm

http://www.trademe.co.nz/property/residential-property-for-sale/auction-660012805.htm

http://www.trademe.co.nz/property/residential-property-for-sale/auction-655564772.htm

http://www.trademe.co.nz/property/residential-property-for-sale/auction-654534690.htm

http://www.trademe.co.nz/property/residential-property-for-sale/auction-650962783.htm

Shane

[speights boy]

Shane
Your "vendor finance" is obviously different from the more common second mortgage type vendor finance.

Can you explain more the relationship between the FHB, the bank, the title and your company ?

[Shane D]

Shane
Your "vendor finance" is obviously different from the more common second mortgage type vendor finance.

Can you explain more the relationship between the FHB, the bank, the title and your company ?

SB,

If you have a kindle or the Kindle app on your mob tele or tablet I suggest you buy Steve McKnight's book 0-130 Properties in 3.5 years. In there you will find a full chapter on "vendor Finance".

But in a nut shell it works like the following. Point form probably easier to explain. I will use some figures for examples

Note that Vendor finance only works well in an environment such as we are experiencing in NZ right now where First Home Buyers find it difficult to obtain finance.

- Company A buys a tired looking house for $350,000 in a suburb popular with young middle class FHBs.
- Company A put down 20% deposit ($70,000) and takes out a $280,000 mortgage from the bank.
- Company A then spends $30,000 on a full renovation and staging similar to the houses in my last post above.
- Company A then claims back the 15% GST on the money invested to date. $350,000 + $30,000 @ 15% = $37,000 GST refund.
- Company A then advertises the house for sale for say... $475,000 to FHB with only a 10% deposit requirement and vendor finance offered for the remaining 90%.
- The FHB pays the 10% deposit of $47,500 and signs the vendor finance contract agreeing that the house stays in Company A's name until FHB pays out Company A in full.
- Company A charges the FHB 8% interest on the $427,500 mortgage. Company A has a 6% mortgage rate with the bank so is making a 2% margin on the loan.
- Company A now has only $15,500 of it's own money invested at this point. ($70,000 deposit + $30,000 reno - $37,000 GST refund - $47,500 FHB 10% deposit)
- FHB eventually (2- 5yrs) gets finance to pay out Company A the remaining $427,500 vendor finance and the house title is transferred into the FHB name. The FHB was eventually able to get finance directly from the bank as the value of the house had risen so they had enough equity to hit the 80% LVR limit.
- Company A receives the $427,500 and pays of the $280,000 mortgage (go up to line 1 for details), pays the $37,000 GST, and pays capital gain tax on the profit of the sale.

So with only $15,000 cash input in each deal, it is easy to see how you could do quite a few of the profitable deals if you had the cash on hand. the cashflow for the 2% margin on the mortgage is quite substantial too.

Too be honest I think the above would work better in lower cost markets such as Hamilton. Or anyway where FHBs have been cut out due to the new LVR rules.

Shane

[speights boy]

Thanks for the explanation.
Hopefully the RBNZ will put a kibosh on your plans before you find the need to implement them.

Your signature says

* Buy as much 8%+ yielding property as you can
* Don't go broke
* Wait

That I can understand.

All that other stuff is far too whizzbang for me.
Good luck.

[Davo36]

Wow, interesting posts Shane. Very enlightening. Thanks for that.

[Shane D]

Davo and SB,

Thanks for the replies.

I like to stay current and look for opportunities/solutions to the problems thrown up by the market. Whether I follow through with this Vendor Finance plan is another story. It seems like a good cashflow play but may be too complicated to administer for a simple mind like mine .

Shane

[NESW]

Ok, so can we see some pictures of these staged houses?

Many thanks Davo36 for staying on track....