Does anyone buy Renovate and sell for profit

[adlin]

If you do Id like to hear from you.
Are you doing it in this market? what kind of discount are you obtaining? what would you spend on reno costs on average? When you are doing your numbers before purchase Do you aim to sell at the current market value for a tidy version of your property or do you reno then add on profit and sell?
Theres free lunch for an honest reply to my email.

[Dean@Massiveaction]

Suggest you look around here for answers.
This place is full of traders and reno kings and queens.
Couple of answers

Are you doing it in this market?
Lots of people are

what kind of discount are you obtaining?
As much as posssible.

what would you spend on reno costs on average?
Never more than 10% of purchase price NEVER

[Hec]

One free lunch coming up !
1st. Whats the property worth completed (tidied up)Be fair, dont be greedy ! then work backwards.
2nd. Work out your cost to tidy up improve
3rd. How much profit do you want
4th. Allow agents fee if not selling private
5th. Allow 3% of final value contingency
6th. Equate you maximum offer and start your negotiate below this slightly.
7th. Do deal (real quick)
8th. Upon resale purchase Dinner at nice restaurant with much wine
9th. Sleep like an angel.

Hec

[toby]

I aim to make double my money in 90 days.
Buy for say $130 spend $20k sell for $175k.
That's a rough example.
Personally in this market I think there's more money in flipping straight away before reno, as most people have no idea of the real cost and time involved.
Here's a formula: After repair value, less 20-30% less repairs is maximum allowable offer.
Use that and you can't go wrong.
And yes in this market there are heaps of people doiung it.
A couple of months ago I bought and sold a house in a week doing no work - made 20k did another about the same time made just over $20k - no work. People look for what they percieve as a bargin because their time is worth nothing.

[Edinburgh]

Toby

Interested to know if you:

A/ Do the work yourself
B/ Sell using an agent

Strikes me that do ups are best suited to people with good DIY skills and the interest in doing it and that there is potential for estate agent fees to use up a big slice or all of the gain.

My own preference is for new builds on green field sites or subdivided sites using a fixed price builder. Very little work - 3-4 days at most - and little knowledge required. Buy right and the margins can be $100k plus, with plenty of allowance for an agent's fee.

Only drawback is that they are time consuming - probably allow 6-7 months - and cost prohibitive compared to the kind of deal you described Toby - ie: you need a bit of capital (or equity) to get started.

[Aston]

My own preference is for new builds on green field sites or subdivided sites using a fixed price builder. Very little work - 3-4 days at most - and little knowledge required. Buy right and the margins can be $100k plus, with plenty of allowance for an agent's fee.

What do you mean very little work 3-4 days at most... you then go on to say they are time comsuming... 6-7 months??? I'm not sure what you are saying here.

[Edinburgh]

To answer the query - they take 3-4 days of my time, but 6-7 months to complete as a building project, which means your capital is tied up for a long time and you have higher interest payments.

They take so little of my time because a fix priced builder does everything just about.

[Cliffy]

Personally in this market I think there's more money in flipping straight away before reno

toby, how does this work?

Do you buy so well you can sell below what it was originally on the market for?

Or do you just count on better marketing and new people looking who never saw it first time around?

[Baywatcher]

After buying a private do up last month I wished I had repaired the tiled roof and hole in the bathroom floor for $1500 then sold it for maybe $20000 profit.

Now I have paint on my nose, dust in my hair and havent played tennis for a month.

I may make an extra $10000 but will be 2 months of missed deals while working and im afraid one of our fellow members may over take me on the tennis court.

[toby]

Hi,
With renos I do work and I get in others to. I employ a guy full time for $11p/hr and he does whatever I say.
I bring in others depending on the size of the project.
I don't do plumbing, electrical, carpentary or carpet laying. I am moving more toward management and more on turnover rather than trying to make every red cent.
I find it easy to sell a do-up at registered valuation as A) People like to do the work themselves B) No argument on price as I didn't pick the price.
I'd rather make $20k now than possibly make $30k in 3mths.
I have a number of exit strategies before I start.
I sell with Agents and privately.
Agents are easier but they cost! I'm looking forward to Go Geko opening up in this neck of the woods.
I love buying but hate dealing with wishy washy buyers.
There are more "green" buyers through Agents though.
I sometimes sell still below market usually for a assignment fee or double settle.
It really depends on the house, the Vendors and my cash situation at that time.
Liquidity and speed is the key.
THERE IS NO POINT doing the work all yourself if the mortgage payments chew up your profit while your "saving" money.
I did that about four years ago. Did the Whole house myself, almost everything, took me 6 mths (big job) I did make over $30k but 6mths is far to long.
Ultimately buying right is the key and only spending money on things that increase value and spending money wisely on increasing saleability.
I am actually building two houses in the next couple of months - first time. I reckon it will take me less than 8 weeks for both as I'm using good looking prefabricated homes. Time will tell but I'd be suprised if it took longer.
I've already got my team.
When you're starting out you do the work yourself unless you either have good CF from elsewhere or you're buying really cheaply.
The key thing is though, if you can pay someone twelve dollars to do a 70%quality job and your trying to do the same job then your time becomes worth about the same.
ie. Management is the key.

Make heaps of mistakes once, and keep going until you win!

[Kimberly]

I am actually building two houses in the next couple of months - first time. I reckon it will take me less than 8 weeks for both as I'm using good looking prefabricated homes. Time will tell but I'd be suprised if it took longer.
I've already got my team.

Hi Toby,

I will be interested to read updates on the pre-fabricated houses you are building.

Kimberly

[Sherpa27]

Toby wrote:I aim to make double my money in 90 days.
Buy for say $130 spend $20k sell for $175k.
That's a rough example.
Personally in this market I think there's more money in flipping straight away before reno, as most people have no idea of the real cost and time involved.

Hi Toby
I really like the idea of flipping a few houses as well as keeping some for long term rent. The tax man has been looking at people who are constantly buying & selling ( Flipping ).
Does this effect you & is there specific structures you need to have for flipping?
Sherpa27

[adlin]

thanks for replies guys i will contact you directly regarding lunch.

[Julian]

Toby,

Lets do the sums, and for the sake of conservatism allow four months between you settling and your buyer settling.
Sell $175,000

Purchase 130,000
Renovate 20,000
Agents 8,440 (4% + $500 + GST)
Valuation 450
Bank fees 250
Interest 4,250 ($150k @8.5% 4 mths)
Legals 1,600
Rates 400
Misc 500

TOTAL $165,890

Profit 9,110
GST 1,512 (no GST paid or claimed against finance)
Tax 2,507 (33%)

Profit after tax = $5,901

Doing a deal like this for a paltry $6k nett return is fairly risky in my books, not to mention a lot of work for very little return.

Julian

[toby]

Hi,
Trading and buy and hold are done through two completely different entities and I pay tax on the trading just like any business because that's what it is.
So far as the numbers the $20k includes most of the expenses you've itemised. Not Agents fees though.
And because of the time and various expenses that is why it is often more profitable to sell as is.
On that particular deal I think the actual sale price was $171,000 (sorry). And from memory I made about $17k - but can't remember. It took 5-6 weeks from buying to selling. I don't actually break all the numbers down I just concentrate on doing it.
Reno's cost 1,5,10,20,30k or more. that's my budget - done.
If you're not doing it in four weeks or less then it's taking to long.
I wouldn't settle to make $10k, it's not worth it.