We’ve said it before, and we’ll say it again…
Renovation is one of the surest ways to create real capital growth and cash flow through property!
But what many home owners don’t realise is that the reality of renovating is very different to what’s splashed across their TV screens every week.
In fact, many lose money on their renovations. They make simple mistakes that end up costing them thousands!
If you want to set yourself on the path to renovation success, this blog post is for you.
Below we unpack the seven things you absolutely need to succeed in your next property renovation project:
#1: Know exactly why you’re renovating
Before you pick up the hammer, it’s important that you know exactly what you want to achieve with your renovation.
This step is important, as your reason for renovating will ultimately decide your approach to the renovation.
If your goal is to improve your home to enhance its liveability, your approach will be very different to someone that is looking to grow their rental yield and increase equity.
#2: Understand the basics of renovation
Maybe you’ve spruced up your own home and feel confident taking on a project that’s all about profitability.
But one DIY job does not the expert make.
It’s important that you are aware of which jobs you plan on undertaking, if any require council permits and how to go about the application process with your local government authority.
Then there’s due diligence to measure the project’s viability, risk assessment and mitigation, and time and cost management and contingency planning.
And that’s all before you even start coordinating tradespeople!
If it’s your first time coordinating a renovation, engaging a properly qualified builder or project manager is a wise step.
#3: Know how much time you can spare
If you’re like most Australians, you’re spending upwards of 50 hours per week working.
This begs the question… can you really expect to take on a major renovation project all by yourself?
In order to complete a renovation on time and in budget, you realistically need someone to be on site to make sure things run as smoothly as possible.
Remember… the longer it takes to complete the renovations, the longer it will take to start generating cashflow.
#4: Have a great team of renovation experts behind you
If you want your renovation to be a success, you need a great team of renovation professionals in your corner.
Some of the best ways to source members for your project team include:
- Referrals from friends or colleagues
- Ask at your local hardware store – they’ll often have ongoing relationships with tradespeople and come to know who’s more reliable
- Stop at nearby worksites and ask for business cards
Chances are you’ll end up working closely with the various tradespeople you employ, so make sure you can build a good relationship with them prior to hiring them for the project.
#5: Make sure you have the necessary finance
This should really be at the top of the list, because if you can’t get the finance you need, everything else is moot.
Ideally, you’ll be able to use existing equity in a property rather than digging into your own pocket. To that end, it’s better to purchase dwellings that are liveable as is, but will generate a better rental income and attract stronger capital growth with a few cosmetic tweaks.
Just be aware that if your project grows larger and you need to seek additional funding from your lender, you may have to jiggle the finances to make the figures work.
#6: Create budgets that allow for contingencies
After your first few renovations, you should have a much better idea about the people and processes involved in renovating.
When working out costings and budgets, make sure you allow for any possible contingencies that might fly your way.
Chances are that unexpected delays will occur on your project as they do for many developments. It’s better to be prepared.
#7: Have a strategy for the renovation don’t work to plan
Sometimes all the planning in the world can fail to account for unforeseen issues.
If the project doesn’t go according to plan, it’s important to have a strategy in place to protect you and your finances.
No project is worth damaging your financial future!
