Renovation Your Way To Profit

By
4/8/2016

After running a successful business for seven years, and with the lease about to expire, Lindsay Fredericks decided to throw it all in to start his renovation dream.

“I didn’t want to renew the lease and the owner wanted more money than it was worth,” he says.

“I have always enjoyed building and renovating so I went to an auction and bid on a house in Kambah in the south of Canberra, NSW.”

Lindsay explains the property ended up passing in with his bid as the highest and after a few months of negotiations he was able to secure the deal.

“We just had to wait a few weeks, and I would ring the agent every few days,” he says.

“The seller’s bank then also wanted the property valued, which added weeks to the purchase time. Our price was realistic; it just took the agent a little while to get it over the line.”

The property was purchased for $325,000 and sold last year for $460,000 after spending around $70,000 in costs.

The X-factor

“I enjoy making old, unloved houses new again,” says Lindsay.

“It must be a true renovator’s delight – the dumpier the better. If it’s in original condition from the 50s, 60s or 70s, excellent.

“It must also be a motivated seller so I look for a deceased estate, an old rental property with evicted tenants or buy before it comes to market,” he says.

Lindsay bought this particular property from a seller who had overextended himself and moved interstate and admits it was close to having the bank take over the property.
 
HOW TO FIND THE RIGHT TEAM

It’s trial and error, unfortunately. I put ads on Service Seeking for tradies and found my carpenters and painter this way. I got six quotes for painting, and they varied all over the place. I asked for every quote in writing and said a tax invoice was required. Some didn’t bother and then I chose from the rest. I ended up choosing the painter as he was younger, and every problem I pointed out he could offer a solution on how to fix it. The rest of them just said it would require major work and kept putting barriers in my way. At the end of the day, I now say if you can see it, it needs to be painted. I avoid painters who say it will be extra because I didn’t mention it exactly when we met. You will go through heaps of tradies that will let you down or not turn up – don’t chase them, move on.

“It was a half-finished renovation with unapproved structures,” he says.

“The house was only three-quarters rendered, while the rest of the walls were original brick. It was like they started all these jobs and never finished any of them.”

In regards to the unapproved structures, Lindsay admits that they often turn potential buyers off the property, as some believe the government will demand they be knocked down.

“It was all disclosed in the building report and pest report that was provided to prospective purchasers,” Lindsay explains.

“We had four unapproved structures – a large garden shed built under power line easement, a two-car carport built forward of the front building line, a two-car garage enclosed and lined to the house, and a large pergola on the side of the house.”

Getting on the front foot

Lindsay explains he likes to get the project ball rolling from day one.

“In the period after exchange, I go in with all my trades and a tape measure,” he says.

“I get the measurements of the kitchen so I can have it ordered online with a delivery date just after settlement.

“I get the painter in early too, then I can book him in for the first week after settlement to get started. Otherwise, they would have to fit me in with all their other jobs, which can blow out the timeline.

TOP 3 RENOVATION BUDGET TIPS

1 Use eBay and Gumtree to purchase as much as you can cheaply.

2 Don’t design the house as if you are going to live in it – keep it economical and neutral.

3 Get multiple quotes for trades – don’t go with the first one just because they turned up.


“I also get the electrician in on day one to disconnect power in walls or remove lights. This means the carpenters can start the demolition of the kitchen and the framing of new walls.”

In terms of a timeline, Lindsay says the shorter the better.

“Do the project in four weeks or less and then it’s back on the market and onto the next project,” he says.

While this might be the goal, it doesn’t always fall into line perfectly.

“The Kambah house took a little longer as we only got access towards the end of the year, then Christmas and school holidays hit,” he explains.

“That pretty much brought us to a halt as all the tradies go down the south coast for their holidays. Also, I thought I could save money by painting the inside of the house myself. It ended up taking forever and I got so sick of painting every day that I have sworn off it for life.”

To help with timing and project management, Lindsay has devised a specific formula for every renovation.

“We have a standard colour scheme that we use, and we know people like it,” he says.

“All the kitchens are the same brand, and the venetian blinds are always white. We keep things consistent because we don’t see the point of changing something that works perfectly fine.”

This formula has been developed along the way from simple trial and error.

“Some things can go wrong,” Lindsay says. “For instance, the lino flooring in the Kambah project took myself and two tradies five hours to pull up. Now we go straight over the top with the new flooring material.”

When asked what were the biggest lessons from his most recent project, Lindsay explains they all come down to timing and budget.

“I just have to learn to stick to a budget of 10% of the purchase price,” he says.

“Things like not replacing appliances for the sake of it – if they look fine then keep them.”

He also advocates getting everything done in the strict four weeks or less and not to put any expensive extras into an entry-level home.

“Stay at entry level, avoid buying old houses in new estates, buy from motivated sellers, research sales prices and work backwards from there to see if there is any profit in it.”


TOP 5 RENO TIPS

1 Get a trade account wherever you can.

2 Gloss white and shiny for doors, frames and kitchen – makes them look new and shiny.

3 Use flat packs for kitchens – spend a little more to get better looking cabinets in white.

4 Use the same colour scheme on every property.

5 Polish the floor rather than carpet.




 

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