Australia is full of houses that are structurally sound, but cosmetically tired, according to Renovating For Profit’s Cherie Barber.
Earlier architectural styles, such as Federation and Victorian, have an integrity and charm worth preserving, but late-20th century houses were built for function over style.
And while the materials used were considered trendy at the time, the styles haven’t stood the test of time.
Most salvageable details from this era are not often available for recycling at restoration companies, as they’re not architecturally significant.
These types of properties are ripe for a makeover, and given the right guidelines, can be dramatically updated to look fresh, clean and modern.
Learn the ropes
Cherie’s company, Renovating for Profit, runs three-day intensive workshops, with training on how you can turn a renovating hobby into a full-time business.
‘But don’t go tossing in your job tomorrow,’ Cherie strongly advises. Instead, take your time and follow her process to make sure you have all the knowledge necessary before stumping up your money.
By following her step-by-step guide for finding the right suburb as well as the right house, knowing how to renovate it within a very tight budget and how to sell it, you can make a profit that’s way beyond your expectations.
And after you have tasted success with your first renovation, you may even feel confident enough to start renovating as a full-time occupation. But it’s all about getting it right to start with.
If you are buying a house to make a renovation profit, first look at the suburb and then at the house.
SUBURB When evaluating the area, start to gauge which blocks of land are the most valuable. Is it good to be near amenities such as hospitals, schools, public transport and shops?
Before settling on an investment area, do your due diligence to ensure it ticks all the boxes that confirm it is a suburb that could make you a profit. Once you’re convinced that you’ve chosen a winning area, it’s time to look at individual houses.
HOUSE How do you know whether or not the price of a house is an accurate reflection of its true value?
Real estate agents can guide you and have a good knowledge of their patch, but they work in the interests of the seller, and their commission also relies on the price achieved.
How much did similar houses in the same street sell for? Did they have superior or inferior features?
You must carry out extensive research to find a property that has a basic structure suitable to make it a worthwhile project.
This home was in dire need of a makeover
Cosmetic vs structural
When starting on a renovation journey, you need to decide whether you want to be a cosmetic or structural renovator.
With a cosmetic renovation, you can generally do most of the work without council approval, and many can be completed within six weeks.
The profit margin is significant, but not as much as from a structural renovation. These tend to take up to 18 months to complete and usually involve council approval, architect fees and major building works.
While there is a big improvement in the potential profit margin, there is much more work involved, possible setbacks and the chance the market won’t be as strong when you sell.
Whatever your choice, Cherie’s workshop arms you with the necessary knowledge to be successful.
Head over heart
People who buy houses they fall in love with often pay more and their projects aren’t as profitable.
‘Renovating to make money is not about finding a house you love and making it pretty,’ says Cherie.
‘Look at it objectively, at its potential, and the structure, land and condition. Think, is it a house I can make money from?’ she says.
The front yard of this house looked shabby and did not have fencing
A coat of render, new porch screen and picket fence totally transform this house.
Set a budget
People who renovate older-style houses often think that everything needs to be ripped out and replaced. While this is a surefire way to have a new modern interior, it isn’t necessarily the best approach if you want to make a profit.
Check every room in minute detail and make a priority list as to what must stay, what can stay, and what must go.
Across the entire renovation project, you’ll need to carefully choose from this list what will make the most impact within your renovation budget. This prep work must be carried out completely before an offer is made.
Have it inspected
Once you have decided on the house you want, ask your solicitor to make it a condition of the contract that the house must pass a building, pest and asbestos inspection.
By making the sale subject to these approvals, it means you retain negotiating power if there are problems.
Otherwise, any repairs to these hidden faults may absorb your profit margin.
A quick house flip is the objective, and while you may have DIY skills of a high standard, it could be a better option to remain a project manager and not do the actual labour yourself.
Hiring skilled labourers means the job will be completed efficiently, faster and with a polished professional finish.
Organising the timings and order of events is the key to a swift renovation. Give the tradies a tight brief and check you’re happy with the work at every stage, which means being present on the site is essential.
Making sure you have everything the tradies need on site is also crucial. If you don’t have the toilet yet and the plumber is ready to install it, you will have wasted valuable time.
You’ll also have to pay the plumber additional fees, as they will need to come back when the loo is delivered.
These types of delays waste cash, digging into your profit margin, so being organised is paramount.
This living room was cluttered and was in dire need of a modern update
Making a good first impression
While you looked at the house in a business frame of mind, your potential buyers are viewing it in an entirely different way.
Among the first to view the property are usually the people who are known as the ‘heart buyers’.
These are the people who fall in love with a house and can envisage living there or aspire to having a home as nice as this one. And they’ll often give you your highest price.
It is imperative to make the first impression memorable for the wow factor and clever choices you have made to improve the property.
From the front gate and garden beds to the door, these elements can put people in a positive frame of mind before they even see the interior.
Once they’re inside, you need to wow them again. This is done with the superior finish you’ve applied to the walls, ceilings and floors, the abundant light you’ve created and the sleek kitchen and bathroom refresh.
An essential part of making your house look its best is to hire a stylist to furnish it. This can be a bit pricey, but it creates a mood that can escalate the house’s perceived value.
You are creating a lifestyle look people want, so don’t try to save on this cost or you risk reducing your profit. These before and after photos prove the value of this expense.
Empty versus styled
Taking the course
Cherie’s three-day workshop, Renovating for Profit, is full of information, with a detailed step-by-step process for every stage, from choosing which suburb, which house and which tradies to dealing with real estate agents and the legalities.
She also shares her winning transformation process from resurfacing the inside and outside, to the most practical ways to create dramatic impact and give the house the wow factor that buyers will clamour for.
There are guest speakers sharing their knowledge on topics such as wealth creation, getting finance to start the process and even how to succeed at conflict resolution.
Each workshop attendee is given a huge pack of books, reference manuals and DVDs, so they can refresh their memory.
Cherie’s designed several spreadsheets that will become the to-do list on everything from doing due diligence on the suburb and house to calculators for all aspects of the reno budget.
There’s also a spreadsheet of more than 5000 lines for each detail of the house from wall surfaces and light switches to the garden. You delete the lines that don’t apply to your project to give you a running list of every single job for the renovation in order of operation.
This allows your tradies to give you an accurate quote, as every job is detailed.
Cherie has put together a buyers’ group, offering discounts on the main purchases for bathrooms, kitchens, flooring and more.
The workshop isn’t cheap, but if you use the tried-and-tested research properly, you can be confident you’ll make a profit. It will more than pay for itself, most likely on the first renovation.
Find out more at Renovating For Profit.
This run-down bathroom needed a complete revamp
This kitchen was stripped so a new, more modern replacement could be installed
The new kitchen has a sleek design with a white and silver colour scheme
Student Success Story: Wayne and Jan, Perth
Profit: $165, 000
‘This property ticked all the boxes, location, transport, cafe strip and near the Perth CBD,’ says Wayne.
‘We bought it in December 2013 for $420,000 and spent $165,400 on renovations including acquisition, holding and sales costs. In May 2014, we were offered $750,000 cash prior to auction, making a profit of $165,000.
‘It was a cosmetic reno. We stripped every room in the house and replaced the roof. We put in new plumbing, rewired, painted inside and out, and did full landscaping. The whole reno took five months from purchase to sale,’ says Jan.
‘Getting the right quotes and dealing with tradesmen, I estimate we would have spent at least $20,000 more on the wrong quotes than what we did without the knowledge and strategies that Cherie teaches.
‘The most satisfying part was just doing the reno and seeing the finished job. And of course, the sale price was a fantastic outcome,’ says Wayne.
‘We got so many positive comments once we’d finished. The property was featured in WA’s The Weekend Westpaper with a great review, which really added to the marketing leading up to the auction,’ says Jan.
‘Our downfall was not doing a written scope of works for the tradies, so we had a few miscommunications. I was on site every day, but still had issues with them if I had to go. Besides that, it ran smoothly,’ says Wayne.
Jan and Wayne gave this house a clever cosmetic renovation
Student Success Story: Rachel, Brisbane
Profit: $115, 000
‘I bought a 1920s three-bedroom timber cottage in a popular Brisbane suburb, close to the CBD. It was derelict and unliveable, but despite this, it had good bones and I could see it had great potential,’ says Rachael, who attended Cherie’s workshop.
‘I paid $400,000 for it in December 2012, spent $105,000 on renovations, plus staging and other costs and sold
it in May 2013 for $650,000, making
a profit of $115,000.’
Here’s a run-down of the works completed over the 12-week reno.
- House restumped and levelled.
- Asbestos removed.
- Roof replaced.
- New electrical wiring and plumbing installed.
- New dining area ceiling relined.
- Walls removed, structural beams installed to support the ceiling.
- New kitchen installed.
- Back exterior wall, stairs and windows removed to make way for a new deck.
- Bathroom moved upstairs to replace the exposed shower room under the house.
- New laundry built under the house.
- Original front verandah opened up and a handrail added.
- Walls and doors added and removed for new study at the front.
- A porch and footbridge built to provide easy street access.
- New driveway and carport added
- New picket fence, retaining wall and a side fence installed.
- Garden landscaped and turfed.
- Entire house repainted.
- House staged and furnished.
‘It’s hard to strike the right balance between spending as little as possible and creating something people will love. You have to be a tough negotiator and a smart shopper,’ says Rachael.
‘Regulations are also much stricter in Queensland than in NSW, so it’s harder to get things done without licences and insurances. Council delays and red tape can also cause problems.
‘But it was a great feeling to have created a beautiful and functional home that sold within a few days.
‘I’ve started my own company, Front Porch Properties, and project manage other people’s renos as well. I feel very fortunate to be able to live and breathe what I love every day.’
This 1920s three-bedroom timber cottage was given a total renovation
A spacious new kitchen was installed in this derelict home
This living area was closed in and restricted
Walls were demolished to create a light and airy open-plan living area