You’ve no doubt been following the last few months, where I’ve been discussing the purchase and proposed renovation of our latest property in Woodridge, Queensland – a suburb of Brisbane within Logan City.
This property checked all the boxes in terms of our investment strategy. It was under market value in a growth area with demand for rental accommodation; it also gave us the capability to undertake a cost-effective renovation to elevate both the rent and capital value of the property.
It couldn’t be better really. We also lined up a contractor who was happy to undertake a fixed-price renovation, which could be overseen by our buyer’s agent as well as the renting agent we will place the property with for management – and who already has tenants lined up to move in!
The problem I’ve got is that the whole project has gone immensely well – so smooth that it makes me a little nervous that something must rear its ugly head at some point.
Most of you will agree this is an excellent outcome – and I am with you 100 per cent. However, it has got me a little stuck in trying to find an angle for this particular article.
I don’t want to bore you with an article about how easy it has been, but you know what, that’s probably the angle I need – preparation pays off.
Fortune favours the prepared
Having checked in with our project team just before writing this, I’ve been informed all that’s left to do is to paint the final coat of enamel around a few door frames and to do the final clean of the property, ready for tenants to move in.
The problem I’ve got is the whole project has gone immensely well – so smooth it makes me a little nervous that something must rear its ugly head at some point
It’s actually been a seamless process all the way from the initial location and purchase of the property, through to scoping out the renovation and actually undertaking the project. So why was it so straight forward?
It has to come down to preparation and experience. We’ve got quite a few of these projects under our belt now, and we have a pretty good track record in scoping out a reno and getting the job done.
Like most things in life, the more you do something the better you get at it – and this particularly holds true with property investment.
However, I haven’t done it alone. I’m fortunate to have a solid team around me, including our buyer’s agent, Steve Waters, who not only acts as a sounding board but is also very hands on. The whole team assists where they can to support us with contacts, access to their network of tradies and other suppliers, and to also provide resources on the ground.
If there was one tip I’d offer any investor, it’s to trust the people you partner with as you grow your portfolio, and to leverage their skills and expertise. With that said, trust is something that is earned through shared experiences and successful project outcomes. When choosing your partners you need to do your due diligence, get testimonials from other clients and understand what services you’re purchasing.
You also need to make sure you don’t burn relationships. Remember, while you are a client and you’re providing a fee for their services – whether it’s your accountant, buyer’s agent or tradies – the fundamental driver of any relationship is trust and respect.
People like doing business with people they like. So build rapport, don’t take take take all the time, and show that you appreciate the work they put in – you’ll find that it delivers more successful outcomes. And this is exactly the case with this project in Woodridge.
The reason for the project’s success is team work. By working together, with everyone aware of their role and function, the project has gone exceptionally well.
If I was going to go looking for problems or challenges we’ve encountered – or where we could have done better – I’d need to dig pretty deep, although a few things could have gone a little smoother.
It’s taken just three weeks to get the job done – a little longer than originally envisaged, but tradies being tradies you’ve got to expect a few delays every now and then.
People like doing business with people they like – build rapport, don’t take take take all the time
I’m happy to wear the cost of another week or so in mortgage repayments should the tradies take a little longer because I know they’ve got good attention to detail and the work they’re doing won’t need to be touched for some time to come.
Nevertheless, it goes to show that projects do typically extend beyond the original planning period and it’s worth being prepared. While this was a fixed-price contract, the additional time taken, albeit small, has cost us a few hundred dollars in mortgage repayments that should have been covered by a tenant.
Another issue – and one that was unforeseen before demo work began – was that we had to replace the hot water system, which was completely unserviceable, adding another $660 to the reno costs.
We also found that after completing the reno – including flooring, kitchen, bathroom, new school house light fittings over the existing bayonets in the bedrooms and a full paint throughout – the fluorescent lights in the kitchen and lounge room did not fit with the rest of the renovated house. We decided to install two new track lights to replace these, adding another few hundred bucks in time and material.
You’d have to be living under a rock to not have seen The Block, or the million and one promotions surrounding it over the last month or so.
I love anything to do with property and it’s a good show – lots of drama, personality clashes and the like. The actual premise of the show is pretty good too: converting an under-realised asset into a marketable property to be sold at auction.
I feel the dollars thrown at these kinds of projects are unrealistic for the common and garden investor. So too is the scope and focus of the renos undertaken.
High-end fit-outs will appeal to the right target demographics, and the properties on The Block typically get a reasonable price at auction. The point I’m making here is those properties are renovated for a particular market, at a particular price point.
This is an important point. To undertake a similar renovation on a property in Woodridge, you’d simply be throwing money out the window. All too often investors over-renovate properties and spend far too much on luxury ¬finishes when they’ll never get a return on their investment.
Putting a $20,000-plus kitchen into a $145,000 property – which is what our Woodridge property cost – would be crazy. So too would be spending upwards of $20,000 on a new bathroom.
You’d never get your money back in a valuation or at the time of sale, nor would you elevate the rent to a point to justify the cost; there is simply no market demand for rents that high in Woodridge.
We spent just over $11,500 on our renovation, including our new hot water system. It was a cheap renovation, but you can see from the pictures the end result doesn’t look cheap.
We could have spent less on this property if we were just trying to ‘tart up’ the existing bathroom and kitchen to elevate the rent by about $20 per week, and buy us a few good years before needing to undertake a more significant renovation.
Instead, we opted to spend the money straight after purchasing the property – while it was vacant – to improve the whole property, including a new kitchen and bathroom.
This doubled our renovation spend but we’ll see that return on investment immediately.
Our agent has tenants organised who are due to move in very soon, paying $280 a week in rent.
Appraisals have also come back strongly with a conservative price point of between $180,000 and $190,000 – a stellar result for the property, considering the original purchase price of $145,000 plus renovation expenses.
Undertaking a project like this has reminded me how much easier it is to renovate a unit rather than a house – simply due to the limitations in work that can be tackled.
As a strata unit, most of the exterior is looked after by the body corporate; there are also limitations in the degree of structural works you can undertake, meaning most unit renovations are usually just cosmetic.
Looking back over this project – our first interstate renovation, and a property I’ve never actually seen – I’d advocate the process of long distance renovating.
With the right team, tradespeople, strategy and oversight it is possible and can be very successful.
Would I do it again? I sure would. Actually, we’re just working on our next purchase in Brisbane, which I’ll share with you next month! Remember, please feel free to contact me at [email protected] if you have any questions or would like any further details on this project.
Renovation in action
New kitchen installed, including overhead cupboards, sink and sink plumbing, splashback tiles, under bench oven and hot plates
Completely retiled and a new vanity and shower glass installed
Louvre doors to the linen press in the hallway replaced, walls painted, and flooring replaced with the same tiles throughout the unit. Curtains replaced throughout
Old wall tiles replaced, walls painted and flooring replaced with the same tiles as the rest of the unit