Adding Value Part 2 | info@renos.com.au | 1300 550 656

Adding ValuePart 2

www.renos.com.au | info@renos.com.au | 1300 550 656

• Wonderful ways to add value

• 7 deadly sins

Adding Value

Wonderful ways to add value

• Add a front fence

Wonderful ways to add value

Wonderful ways to add value

• Add a shade structure

Wonderful ways to add value

• Open the verandah

Wonderful ways to add value

• Remove vegetation and tidy up yard

Wonderful ways to add value

• Make the property dog friendly

Wonderful ways to add value

• Paint kitchen cupboards

Wonderful ways to add value

Before After

• Turn a window into a doorway

Wonderful ways to add value

• Replace handles

Wonderful ways to add value

Before After

• Add a bedroom

Wonderful ways to add value

7 Deadly Sins

Don’t try to turn a ‘Lemon’ into ‘Lemonade’.

• Do the numbers• Do NOT do “all” this reno work for nothing, you

have to make money or you must walk away!

Sin #1: Wrong Reno Property/Wrong Price

Sin #1: Wrong Reno Property/Wrong Price

THE LESSON• Renovator not a miracle maker.• Get to know the “differences between cosmetic problems

and terminal diseases”, where the instant equity is made.

THE FIX• Educate yourself.• ‘Investor” renovation is very different to ‘home’

renovation.• Learn the short cuts to quick capital gain.• Model and mimic people who have “been there and done

that”.

Sin #2: Wrong Area

• Burnt out cars and graffiti on garages are a good indication of a “Beware of a Capital Loss” minefield.

• It costs no more to more to renovate a property in a good area than it does in a slum.

(Who is the end user?)

Sin #2: Wrong Area

THE LESSON• Do your research.• Look out for future infrastructure changes that may

effect your property. This may savage your capital value.

THE FIX• Research eg. demographics of the area.• Find out what is planned for the area eg. a new

University that no one knows about.• Look at other people’s renovation results in the area

Sin #3: The Eternal Optimist

Underestimating what needs to be done!

“Oh it’s so cute!”

But what about the cracks in the walls and floor?

“Whaat …I didn’t see them!”

Sin #3: The Eternal Optimist

THE LESSON• Getting carried away with the agents’ enticements like

… ‘Needs TLC’ (when maybe it really needs TNT!).

• First reno total ‘stuff up’ may result in one of 3 things….– Lose money and walk away… never to do it again– Lose money and learn to do it better– Get lucky

THE FIX• Get some advice• Program the work and see if it still makes sense… as an

investor not as a homeowner.

Sin #4: Disorganised

The painters are painting, while the tilers are tying to tile the floor and the floor polisher is trying to sand. The plumbers are on holidays... Where is that !@#$ electrician to run the cables and put on the power. It's absolute chaos.

Help!

Sin #4: Disorganised

THE LESSON• Communication: Communicate, communicate,

communicate …make sure your work program is understood by all parties.

THE FIX• Take an active interest in the project, but don’t get in

the way.• Keep your eye on the ball.• Make sure if you say you will do something, do it!• Note all conversations in your job diary.• Issue any instructions in writing.

Sin #5: Overcapitalising

Emotion, one of the most common renovating

sins.

• This is the ‘mother’ of all reno mistakes… spending more money than the value you add. This is a cardinal sin of renovation.

• DO NOT spend $1 to make $1. Nooo!

Sin #5: Over-capitalising

THE LESSON• Spend a little to make a lot.• Don’t cut too many corners - ‘paint and profit’ =

‘shonky/bog/flog’• Question: If I do this (cost $x) will it raise the rent?

THE FIX• Over-capitalisation is normally caused by 3 things:

The Unknown, Emotions and No Budget• Get a second opinion• Do some courses on renovation• Talk to other investor/renovators.

Sin #6: Taking Too Long

• Time is money.

Sin #6: Taking Too Long

THE LESSON• Do minimum work to get maximum result in the

shortest time.• Time is money in the forms.

THE FIX• Set a realistic construction program with dates, times,

materials, responsibilities and stick to it. Make sure all parties have a copy and stick to it.

Sin #7: Running Out of Money

• You blew it…you can’t finish the work…you can’t sell your house, you have just committed “renovation hari-kari”.

• You are about to become one of the dreaded “D’s”…a Desperate seller.

• A half finished house, an empty bank account, no cash flow, and the only thing building is the interest you owe on your investment loan.

Sin #7: Running Out of Money

THE LESSON• Budgets and job program are important.• It is easier to trim the work in progress to save money than

to try to finish a project when you are broke!

THE FIX• Always keep a ‘buffer’ reserve to bail yourself out of trouble.• Walk before you run.• Get some basic reno skills. Time planning, job

programming.• Talk to people who have done what you want to do.• Do an owner-builder course.• Invest in ‘investor’ renovation books and videos (beware the

‘restoration’ or ‘house and garden’ style)

Summary

• Add value can be for more rent or higher sale price

• We have 115 Ways to Add Value• 7 deadly sins..it’s all about research,

setting goals, spending wisely and time is money