Photos from recent renovation

[drelly]

Hi peeps,

I promised Marcus that I'd put some images online and post more information about my first venture into trading property.

This house was bought on 26th January 2006 for $110k. From what I know the vendor had owned the property for 8 years and never done an inspection as the tenants had always paid their rent on time. It was in good condition when originally let. The tenants left after three weeks and yes, they did ask for their bond back. I laughed hysterically and explained that I bought the house, not the rubbish.

The tenants did make some attempt to remove rubbish and left a nearly-full jumbo bin when they left. I filled another one and had to use an excavator to dig out the pile of rubbish left behind the garage. Eager kids from next door were enslaved to remove bottles, clothes and nappies from under the house.

Here's a rough breakdown of the costs.

Legal $1800
Interest $3000
Interior redecorating $8300
External paint $2000
Repairs to decking $250
Parts and fire place repaint (done myself) $120
Driveway $950
Advertising (sign, trademe, newspaper) $300
Curtains $500
Carpet $2300
Fencing and garden shed repairs $720
Plumbing $250
Electrical parts (lights, switches, points were mostly broken) and work (did mostly myself) $750
Timber for deck, garden shed and various repairs $400
Repairs to windows and garage door $900
Cleaning and gardens $1000
Floor sanding $1000

So total expenditure was $25k

I had it on the market at $179,000. There were other properties in the area listed at that figure which are still for sale. The advantages I had were in location as it's on the better side of the suburb and section size - 931m2. I had a lot of interest over 3/4 weeks but no offers. Then on one weekend, I had three offers in one day and got my asking price. Two were investors (who I'd targetted in my advertising) and one was a first home buyer (who got the property in the end due to less conditions). I sold it myself and the new owner settled on 16th May.

If you have any questions, fire away!

cheers,
Dave.

[cube]

Good work Dave.

How many hours would you estimate that you have spent on the project (from starting to look for a do-up to banking the profit?)

When you bought, what was the price being asked, and was there any real (rather than real-estate-agent's) competition?

What have you learned?

Thanks

cube

[cantthinkofanickname]

Pics look good you did a nice job. WELL DONE

[whitt]

'Just out of interest what were the paint colours??

PS Congratulations on work done.

PPS Hot tip. I noticed the lovely tiled fireplace. If you ever have one of these again either fireplacee or kitchen etc.. I recommend a product called White Knight Tile and tub paint available Bunnings/ Hardware stores.. Paint over the ugly tiles like new. The Aussies use this product over there all the time on there reno's as they have houses with lots of tiling

[drelly]

Cube,
Very hard to say! Some days I was there all day and others, I just swept through. What was unexpected was the drain it would be on my usual work. It wasn't just the time, it was the distraction! I came to understand how people under stress could feel very motivated. The original asking price was $120k and I must admit that although I saw the property for sale, it fell in my lap from another investor who picked it up for $105k. I paid him a $5k finders fee. I wasn't really looking that hard but the opportunity came up so I grabbed it. Initially, the plan was to do a minimal tidy up for under $10k and flick it fast but problems and positive feedback encouraged me to go further.

Whitt,
The exterior and doors were Sisal (Resene) and the walls were half Sisal. I could have gone to 1/4 Sisal for the walls I think. I did wonder about painting the tiles but thought that it would scratch off. I'll have to check it out next time!

[Cliffy]

Nice work!

Are those your signs on the place in the before reno pic?

[whitt]

How many weeks did it take to carry out reno?

Paying the local kids to help out, what a great idea. I am sure they did not mind making a few extra bucks.

It seems you have the makings of a good property magazine story here. Figures photos etc. Have you thought about getting your name in the big lights and contacting the mags to run a story?

[drelly]

Grant... yes they are. Spot my *ahem* deliberate double "is" did you?

Whitt... the reno was a hectic four weeks. It was far worse than you can see from the photos. Most walls and doors had holes, all the electrical fittings were broken or gone, the bathroom vanity was soggy, the entire house was filthy.

I always like reading those articles... not sure I want to be in one just yet! Although, I made a good profit, I still feel fortunate that I was able to cut my teeth on something with so much margin. The learning curve was steep and more expensive than expected! LOL

I did write a short piece for our local newsletter about it, so here it is...

I’ve just privately sold my first property trade and what an adventure it was! It was a crash course everything I hadn’t yet learnt from buying and holding properties over the last few years.

Going into the project, I’d decided that I wanted to learn everything I could to get the most from the experience. Initially, I had planned (on advice from those wiser and more experienced than myself) to spend less than $10k tidying up the house on the inside to only undercoat stage and quickly flick it on to someone who was prepared to do the finishing. However, pricing the job showed that essential work was going to inflate costs, feedback on sales price for a full renovation was good and the plan changed to a total revamp.

The house had extensive superficial damage and as I was pulling fossilised half-eaten meat pies and cigarette butts out of the holes in the walls, I wondered how the tenants had managed to keep their tenancy for the past 8 years! The two jumbo bins of rubbish that were removed from the property (using an excavator in the back yard) and the frazzled and mummified rat I removed from the wiring in the hot water cupboard were good topics of conversation when the tenants requested the return of their bond money...

Here’s a few tips and suggestions for first time traders.

• Understand the area and know the potential. Just because it’s a “do-up“, it doesn’t mean there’s a profit in it and just because it’s a “bad” area, it doesn’t mean there’s less room for improvement. Don’t rely on agent’s advice!
• When working with key tradesmen, use written instructions, set deadlines and make clear your required standards. Don’t get caught out by the “it’s just a rental” attitude. Paying $15 an hour is only cheap if it gets done well/on time!
• When working out your costing, don’t underestimate the interest payments. A $200k house will cost you around $350 a week in interest! $4200 in 3 months!
• Don’t be afraid to ask for quotes from different people and haggle on price.
• Ask yourself: “Can someone else do this cheaper, faster and better than me?”
• Will the sale price improve with the best carpet/taps/kitchen bench?
• When selling, it’s the buyer’s perception that counts, not yours but don’t be put off by the negative feedback, they may just want a cheap deal!
• Remember that you can sway buyers’ attitudes to the property by the way you market it. Buyers have different criteria so treat them all differently.
• Don’t put all your faith in that one “keen buyer” and neglect to market the property. I discovered that the “keen buyer” that approached me the day I started work on the house and was in contact throughout the process had still not approved their finance by the time I sold it! Tyre kickers are everywhere!
• If you’re going to sell privately, put “no agents” on all your advertising or you’ll be inundated with calls from agents. Selling privately can be stressful, time consuming and expensive (if it takes too long) so if you don’t think you can “sell”, then give it to an agent and factor the cost into your calculations.
• Get your structures right. No GST registration before purchase means no GST claim on purchase price! Don’t forget you pay GST on sale and don’t go in with too little money and put pressure on yourself to sell!

cheers,
Dave.

[BusyLizzy]

Thanks for posting the story and pics Drelly! It's amazing to see what a 'dogbox' can be turned into, and helpful to see the numbers.

I have to say, that if I walked into the house when it was in the 'before' state, it would take lots of imagination to see what it could be turned into! I amazed the tenants had the audacity to ask for their bond back!

Anyhow - well done. Very inspiring!

[revdev]

Hi Dave,

Outstanding work - $44k equity/cash after investing a bit of time, thought and sweat. I have just finished a similar project so glad to know I'm not the only crazy one (plenty of people happy to tell me).

Quick question on agents. Considering the time and investment we make as investors trying to find good agents to work with, did you experience any negative feedback in your choice to go with a private sale?

All the best

G

[drelly]

Liz - Thanks... that before photo of the outside still makes me shiver! On paper it didn't take long but it seemed like an eternity at the time.

RevDev - Not open negativity but some seemed resentful or doubtful. The doubt I can understand as, most private sales seem to end up being sold by an agent. I've done a lot of sales work and I still found it difficult. The negativity always seemed to disappear when they realised I was still looking to buy!

[essence]

Reno Photos

Hi Drelly

Thanks very much for posting those photos on here.

I'm doing a reno at the moment as well, but thankfully nothing as bad as yours to start off with!! I'm week three into my project and hopefully will have it finished by week six.

Interesting to hear your comments about the colour - I'd already decided to go with 1/4 Sisal.

[spurner]

Huge difference. I was most impressed with the wooden floors, they positively change the look and feel of the house alot.

[FatBelly]

Dave,
I have to reiterate what the others have already said, thanks for showing these photos and providing more details on this reno. Can you tell me what made you decide go the whole-hog with the reno instead of just spending the $5-10k originally planned? Do you think you could've spent less on the place and released your cash earlier to put into other deals or was this particular property only suited to a full-reno job?
Only asking as I am in the process of deciding whether to do what you have done myself, or whether to flick the property on to someone else who may have more time/resource to put into it. The full reno takes up a lot of my time and resource but could potentially be much more profitable, whereas by flicking it early it will be less profitable but will take up much less of my time and allow me to release cash earlier to put into other deals. What factors made you choose to do the complete reno on this one rather than your original plan of a quick-flick?

[Propoholic]

Hi Dave

Thats an excellent result, thanks for the before-after photos and cost breakdown.