Cheyne and Sarah Meehan made serious profit through smart buying and renovation. Here’s how they managed to double their money in less than three months.
Wstarted investing in property in our early twenties after purchasing our first home, an old post-war property in Rocklea, on Granard Road, one of the busiest main roads in Brisbane.As the market was beginning to move quickly at that time, we soon found we had equity in the property. We received some advice from a parent that we should borrow the money and invest – so we did.
Not the type of people to do things by halves, we ended up buying two blocks of land in Springfield Lakes and building two new four-bedroom, two-bathroom homes. We sold these, making approximately $150,000 in profit a couple of years later. During this time we renovated the house in Rocklea, sold it, and purchased another property in Doolandella, which we also renovated and made a nice profit out of.
We’ve been investing for approximately eight years, with a break of three years in between to start our family. We currently hold four properties valued at approximately $1.8m–$2m. In 2013 we launched full steam ahead back into the property game.
We had always planned to make some changes to the house at Rocklea, but ultimately it was a bad experience, with tenants who forced our hand, especially as our insurance only paid for some of the damage done to the property. Perhaps the silver lining was that this not only allowed us to increase the rent by $40 per week but also saw us make $110,000 in profit out of it a few months later.
Our reno criteria
We only consider property that is reasonably priced; only needs cosmetic work such as paint, new carpets, polished floors, bathroom and kitchen reno, light fittings, etc; has a functional layout; and is in an area where spending money on the property will increase its value.
How we decide what reno work to do
This has usually been pretty obvious. For example, in one of our properties the previous owners had gone for a Mediterranean look and painted a feature wall in the family room a mustard colour. This immediately reduced the number of potential buyers (and even renters) – who might not have been able to imagine themselves and their furniture in the house – so we painted the walls a neutral colour.
We also gave the bathroom a facelift as it had emerald green tiles, making it look much smaller than it was. And we laid timber flooring over the top of the tiles to completely update the look of the whole house – this was the most expensive thing we did but the overall effect was worth investing in. Basically, we just make tired properties look new again.
Ultimately, our goal is to make money by increasing our equity and/or rental returns on a property.
How we keep to our budget
We decide how much we should spend by estimating how much we think we can sell the property for, then we determine whether or not we can do everything we think the property needs within that amount. If we don’t think we can do it, we don’t buy it.
For example, we recently looked at a property in Inala for $250,000; it was in original condition but had been well maintained so mostly only needed cosmetic work. But because it was in its original condition we would have needed to renovate the entire house to make it appear new again, including completely replacing the kitchen and bathroom. This would have cost more than the amount of money we would have made after the renovation, so we didn’t buy it.
If we think we can do the cosmetic work and sell the property for more than it will cost us, then we will put in an offer. We focus on the essential items first, usually the paint and floor/window coverings, then maybe some new door handles in the bathroom and kitchen and perhaps new benchtops if required.
This usually gives the whole house a fresh look and feel and makes it more appealing to buyers and renters alike.
We once made the mistake of using a water-based paint over the top of an acrylic, so all the new paint peeled off easily – rooky mistake! And laying pavers isn’t as easy as it looks, nor is putting in a pool, and something is probably going to go wrong when you’re using heavy machinery. But as long as you allow a contingency or you can fix the problem yourself, you can minimise the impact these things have on your budget. I’d say we have probably spent the right amount of money on each property to maximise our return on them.
If I had a bigger budget
Our current reno is still a work in progress; if I had a bigger budget I’d probably just get it all done quicker!
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