Q: I know that when you’re renovating it’s best to write a ‘run sheet’ for the different trades and deliveries that come in, but how do I prepare for when something goes wrong and varies from this run sheet? How can I ensure I don’t lose money with wasted time?
A: A well-organised renovation project includes a well thought-out project plan listing every task to be completed (called the scope of works) and careful consideration as to what tasks happen before others in a logical, process flow.
For novice renovators, this lack of knowledge on the sequential work order can be the biggest sole issue. Any work task requiring rework, means additional costs and potentially lost profit. Even the most experienced renovators still cannot accurately map out the whole project from start to finish, exactly to plan.
Tradies get sick, material suppliers are delayed or it rains and you lose a day on site. Inevitable delays will happen so it’s therefore sensible to build incremental delays into your project plan in advance of your project starting. Allocate one day a week or a fortnight for unexpected delays and you’ll be well covered.
Good project planning software like Microsoft Project is perfect for renovation projects where delays are commonplace. You simply update one date and all other work tasks automatically reschedule. The key for you as project manager is to communicate, well in advance, what new start dates tradies down the line are required to come in at.
When problems arise, address them and overcome them immediately so that the project doesn’t stop at any point. Each day that goes by without significant work happening on site will cost you in holding costs. And pay particular attention to long lead items like doors and windows that can blow your timelines out if you get these wrong.
Q: A real estate agent has told me that a property I am looking to buy as an investment is able to be subdivided. What else do I need to consider to make sure it is a good opportunity?
A: Firstly, never trust what an agent tells you. Not all agents are truthful, ethical or have the correct facts or knowledge themselves. As the potential purchaser of the property, you need to do your own thorough research to get the correct facts.
Firstly, go to your local council and ask to speak to a town planner. Ask if the site is a development site, can it be subdivided, how many dwellings would be allowed on the site and is there any factors that would stop you from gaining development approval.
Random issues such as the site being in a bush fire prone zone can stop sites from being development deals. Once you can confidently say the site can be developed, you need to work out what type and how much development you should put on the site that caters to meet local market demand, particularly important if you are relying on an immediate resale on completion of the development.
You will need to engage an architect to design the development and you should produce a detailed financial feasibility to fully understand all of the project costs involved and be able to forecast a conservative resale price for the development. Only this process will determine if an acceptable profit can be made from the development.
Twenty per cent net return on investment is ideally your target goal and if you can’t achieve this, walk away from the deal. Never get emotional, it’s a business deal that has to make financial sense.
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