IN FOCUS: Property Management

Renovating could make you a lot of money, but there are potential dangers that even seasoned investors fall prey to:

1. Rushing in and buying something with only marginal profit

In a hot market, it can be difficult to find a project that stacks up, with so many competing buyers. However, you need to hold your nerve. There’s no point buying something that’s only going to make you a few thousand dollars or, even worse, lose you money.

2. Assuming that buying something cheap is automatically a good renovation project

Cheap houses are often that way for a reason. It might be because of the location of the property, or it could be something structural. It might be because it’s a one-bedroom house in a suburb where families are the prevailing demographic. There are always property bargains to be found, but make sure you’re buying a bargain and not a lemon.

3. Not understanding the area in which you want to renovate

Every neighbourhood has streets that are more sought after and areas that are considered not so desirable. Understanding the subtleties of your target suburbs and the values of properties in the area will help you know when you’ve spotted a good opportunity to buy at a fairly significant discount.

4. Not researching/knowing your likely selling price

If you don’t know what the property is likely to be worth once the renovation is complete, you’re not going to know your profit figure and whether the project is viable. You should be researching the selling price of renovated properties in the area, or unrenovated properties, and making an educated estimate of what the property is likely to achieve once renovated.

5. Not planning and costing your renovation before you start work

While important in any renovation project, this is particularly critical with major structural changes where you’re using a builder to add rooms, move walls, put in new bathrooms or bedrooms, etc. It’s critical to do all the planning up front before any physical work is done so you’re not making any changes along the way. If you’re making variations midway through a structural renovation, the cost blowout is significant and can have a major impact on your profit. Look to have everything in place, even down to the tiles and taps you’re going to use, before any work commences.

CREW