Make A Career from Doing Renovations

Buying a diamond in the rough and doing a smart renovation then selling or renting it at a killer profit is a difficult thing to pull off in 2019.

Novice property investors think the biggest part of property investing is choosing the right wall colors and flooring.

They don’t consider the true hidden costs of renovating like:

• *  Stamp duty.

• *  Agent selling fees.

• *  Expensive licensed trades people.

• *  Interest or holding costs.

• *  Tax on profit.

 

With the hidden costs being so potentially high, we look at a strategy that allows enough ‘fat’ for the renovator to keep a pipeline of renovation momentum.

Negotiating the right deal.

To remove the cost of stamp duty, a smart property buyer will negotiate a deal with a lengthy settlement and a 3 the renovator to complete renovations on the property then reselling it prior to settlement.

The key to selling the property prior to settlement is using a clause called the ‘and or nominee’ clause. This allows the original buyer to sell/transfer their obligation of the contract of sale, including the stamp duty, to any buyer all before the settlement date.

This strategy needs a decent time frame, 5 weeks for a renovation plus 4 weeks for a selling campaign plus a standard settlement of 60 days. Therefore a 6-month settlement period would be sufficient.

Buyer’s agents are highly valuable to successfully pulling off this kind of deal. They are able to create renovations for their clients easier and more secure.

 

Don’t Pay Tax On Your Profit.

If you choose to renovate after you settle on the property, there are still great ways to reduce your overhead costs.

Consider living in the property and making it your principle place of residence. This means you won’t have to hand over half your profit to the ATO when you sell because you will only pay tax on the profit, if it’s an investment property.

 

Reduce Agent Selling Fees

A traditional agent can charge over $15K per property sale. In this day and age there are many options that can halve this cost and still use the guidance of experienced real estate agents.

Consider calling a buyers agent they have a network of buyers that are looking for off-market property to purchase.

 

Are You Cut Out For Renovations?

A successful property renovator takes capital growth into his or her own hands rather than the traditional buy and wait model.

They are confident in their ability to complete many tasks quickly whether it’s doing the job themselves or coordinating a team to complete the works.

Every property renovation is different and presents different challenges. Having the ability to make a quick and wise decision is key.

It’s vital to pick your battles wisely when it comes to taking on works. A good renovator understands their skills and what they are capable of completing. Things like painting, tiling and landscaping can be a quickly picked up. Installing a kitchen on the other hand is something that requires a level of trade skill.

A great network of people that can assist you in the knowledge and understanding of the task at hand is vital. If a renovator doesn’t have a resourceful network of friends or is good at sourcing cheap labor things can become difficult and very costly, taking away from profits.

Trade experience isn’t always the leading skill of a property renovator, more so the ability to roll up their sleeves and do a lot of the simple work long into the night, if need be.

A killer attitude and the right plan is a successful renovator’s best friend.

 

 

About The Author.

Mark Ribarsky, a Bachelor of Business, is the founder of Wise Real Estate Advice & Property Managers Melb. He is an experienced residential property developer, a fully licensed real estate agent, a buyer’s agent and property manager.