Blake Roeleven enlisted the help of his father and uncle for the renovation of his third property in, Victoria, and while he ended up manufacturing $100,000 in equity he admitted that it was not an easy task to complete for their small team.
Aside from the time and effort it required, Blake and his relatives also had to deal with "shonky" tradesmen that further delayed their progress.
He shared his journey with Smart Property Investment's Phil Tarrant and gave tips to fellow investors on how to spot dodgy builders for themselves:
Tell us about the property.
Blake Roeleven: This was something a little bit different than what I typically would do. Basically, the issue with this property was [that] I only had a 10 per cent deposit. I got my dad to go as a security guarantor on the property... The intent was to spend a bit of money on [the] renovation of the property and get it revalued and then release the security. Which it did, but the renovations were extensive. It's very hard to manage an interstate renovation on a tight timeline. We did it. We went down, my dad and my uncle, [and] myself and renovated the property.
How much did you pay for it?
Blake Roeleven: Property was $600[,000]... No tenant. It was owner-occupied... It was post-settlement, we did all the work... Settled at 3[:00] PM on April the 7th and I had the bobcat in there at 3:05 PM. Chopping [trees] down—you name it.
How long were you down there for?
Blake Roeleven: Two weeks. Then we had to come back for a few days. Driving down to Melbourne for two days of work and then driving home was torture, but people were saying we were nuts and if I look back at it, I won't do it again for a while.
I learned a hell of a lot through the process. I've learned there's a lot of shocking tradesman in Victoria, building boom. Everyone's the professional tradesman. We got ripped off a few times, but I managed the budget pretty well, which I was pretty happy with. We ended up spending $35[,000] on reno[vation]s, $2[,000] on expenses and stuff like that. We got it done in three weeks, which was [the] completely new bathroom, gutted from the subframe up. New kitchen, ripped off all the titles, polished timber flooring, repainted, three built-ins, front- and backyard. The whole thing.
I got it revalued last week at $700[,000]. It released the security. It did what it needed to do for me.
Are your relatives also builders?
Blake Roeleven: Uncle is ex-builder/posty and my dad is a senior banking executive that can seem to do lots of things.
How many hours are you working in a day?
Blake: Well [we would be] starting at 6:00 and most nights [we would be] finishing at 9:00.
First day would have been really exciting, but when did you go, "This actually sucks?"
Blake Roeleven: 6:00 AM on the third day... We had a very tight schedule. Subfloor[ing], waterproofing, tiling—all that sort of stuff lined up. Once we took off the bathroom floor and we saw that there was no drainage, [and the] electricals are screwed, we were like, "All right, things are going to get pushed back."
I'm a bit of, like I said before, a bit of a task master and I'm just trying to work out the time slots and how things are working. I was like, "All right, this is going to be a headache." My dad's the eternal optimist, "We'll get it done, don't worry about it. It's fine."
Did it ever kick off between the three of you? Did you get pissed off at each other?
Blake Roeleven: Surprisingly not. My dad and I clashed a little bit and stuff like that. We had a little bit of trouble, but typically not what you would expect. We got through it pretty smoothly.
When did morale hit its lowest?
Blake Roeleven: It was pretty low, I'd have to say, throughout the whole thing. We managed the budget pretty good, that was fine. If you're going to spend the money, you want quality work and you want the right finish. In the back of my mind, it's just a rental property, get it to rent. Throughout the process, it was just one road block after another, shocking tradesman that really made things really difficult.
What do you mean by "shocking tradesman"?
Blake Roeleven: I've experience just about every level of shonkiness.
What's your top five tips of spotting a "shonky" tradesman?
Blake Roeleven: If they're readily available, then they're probably not that great. Good guys are flat out booked. Then they typically charge more, so you get what you pay for.
I had one guy come in to tile the kitchen splash back and, basically, it was a dog's breakfast. When I came back from Bunnings with a trailer full of stuff, said to my dad, "Did this guy leave? He's demolished the kitchen. He's got to come back and fix it." The problem was he used brick mud, so the tiles were already set. We just re-Gyprocked the whole area. We had to cut all the Gyprock out. I've got another guy to come and do it.
I didn't pay that guy. The other guy came to fix it while we were back in Sydney... He took my money and my keys. He was noncontactable, so we drove back down to Melbourne to fix everything and we had no keys and $500 missing and no work done. We had to break in through the back door. Got properly ripped off on that one. It's just one thing after another and you just want to get it done well at that stage. You're just like, "I want to get the damn thing done and move off."
What's the lesson learned after dealing with this property?
Blake Roeleven: If it's been a renovation [to be] attempted, beware. Buyer beware, particularly if the renovations look half-cooked. There's usually more than meets the eye once you start pulling away some stuff. I tried to get access pre-settlement, but they wouldn't budge. That would have helped a lot. Buying in a hot market usually means that you've got less opportunity to flex contract conditions and things like that. We sort of had to do what the vendor wanted to secure the property.
If I could do it again, I would have been more forthcoming with what I wanted. He wanted to release the deposit early, but wouldn't let me into the property. I was like, "It doesn't work like that. You give and take." I think just understanding basically what you want for the outset for the property, what you're prepared to part with, in terms of the cash position and renovating's hard work.
In the end, were you satisfied by how thing turned out?
Blake Roeleven: I was satisfied when the val[uation] came through. I thought it had come through, I got one val[uation] at $670[,000] from the original valuer and then I had another one come through for $700[,000]. As long as it came through at that, I was satisfied that what I needed to do was done.
I bought it for [$600,000], spent [$35,000], and got [$700,000] out of it.
So, you added $100,000 in equity in three weeks’ time?
Balke Roeleven: Correct... I think it did what it needed to do. It unlocked the property, got me to 80 per cent LVR [loan to valuation ratio]. The way I managed a lot of the invoicing and a lot of the builders and stuff like that was being really clear with them. If this is a repair, i.e., you're fixing the back yard and releveling, doing all th[ose] sort of stuff, I need it [to be]marked as that. If it's a replacement for wardrobes, then fine.
How can an investor prepare for doing his own renovations?
Blake Roeleven: I think that's the thing behind the scenes—before I went live with doing the reno[vation]s with the property, I had meetings with the accountants, the property manager, all th[ose] sort of stuff, so I knew exactly where I stood.
Tune in to Blake Roeleven's episode in The Smart Property Investment Show to know the steps he's taking to keep himself on track to achieve his goals, and why he's holding himself accountable for the overall success of his wealth-creation efforts.