Renovation Insight: 5 Common Renovating-for-Profit Mistakes
An experienced renovator shares the biggest blunders rookies tend to make – and how to steer well clear of them
Those home-makeover television shows make renovating look so easy, but the reality is quite different. Budget blowouts, delays, unexpected costs… all of these can cause untold headaches and really eat into your profits. Here are the five most-common mistakes rookie renovators make, and expert tips for how to avoid them.
2. Searching for the ideal project
Many novice renovators waste time searching for the ‘perfect renovator’, when such a thing doesn’t actually exist. Instead, you should focus on identifying a renovation-prospect patch (or location) and outlining a clear reno strategy. Ask yourself:
Many novice renovators waste time searching for the ‘perfect renovator’, when such a thing doesn’t actually exist. Instead, you should focus on identifying a renovation-prospect patch (or location) and outlining a clear reno strategy. Ask yourself:
- What’s your budget?
- How involved or hands-on do you want to be in the renovation?
- What type of renovation are you interested in doing – structural or cosmetic?
3. Underestimating the cost of a renovation
It’s easy to underestimate the costs involved in renovating. If your budget blows out, your profit margin will reduce, which means you won’t be able to afford those finishing touches that can make all the difference to the result.
The key is to do a detailed budget breakdown ahead of time that includes:
It’s easy to underestimate the costs involved in renovating. If your budget blows out, your profit margin will reduce, which means you won’t be able to afford those finishing touches that can make all the difference to the result.
The key is to do a detailed budget breakdown ahead of time that includes:
- Purchase price.
- Stamp duty.
- Insurance.
- Costs for property improvements.
- Hidden extras such as demolition and site clean-up costs.
4. Believing in the myth of the renovation-profit percentage template
Many inexperienced renovators believe in the existence of some kind of magic renovation-profit percentage template, such as ‘spend $50,000 to make $150,000’, and will try to stick rigidly to this.
But percentage templates are unlikely to work, particularly given that prices for things such as trades vary across the country. Instead, ask yourself how much money you want to walk away with from the renovation. Knowing this figure will tell you exactly how much you have to spend.
Many inexperienced renovators believe in the existence of some kind of magic renovation-profit percentage template, such as ‘spend $50,000 to make $150,000’, and will try to stick rigidly to this.
But percentage templates are unlikely to work, particularly given that prices for things such as trades vary across the country. Instead, ask yourself how much money you want to walk away with from the renovation. Knowing this figure will tell you exactly how much you have to spend.
5. Not having a good team behind them
Finding your A team isn’t always easy and may take time, but is well worth the effort as it can make all the difference to your renovating experience – and what you eventually walk away with.
Look for experts whose approach lines up with your goals and strategy.
See more cool contemporary living rooms
Finding your A team isn’t always easy and may take time, but is well worth the effort as it can make all the difference to your renovating experience – and what you eventually walk away with.
Look for experts whose approach lines up with your goals and strategy.
See more cool contemporary living rooms
The top five people you need on your team are:
Financier: Your money guru should be the person who helps you get your cash ready for the biz of renovating. He or she is the one who should be setting up any necessary loans for your project, and giving you some expert advice about what sort of money set-up is right for you.
Financier: Your money guru should be the person who helps you get your cash ready for the biz of renovating. He or she is the one who should be setting up any necessary loans for your project, and giving you some expert advice about what sort of money set-up is right for you.
Certifier: He or she is fully versed on all things to do with the planning and developing side of things with your local council and state regulators. They know the ins and outs of whether you can actually extend that terrace by two metres or add an extra balcony.
Accountant: Your tax guru will not only help you with the business side of things, but the asset side of things too. A good addition to your team is the accountant who lays out all the facts about what you can and can’t do tax-wise, as well as what you should be doing when it comes to your business structure.
Real estate agent: Think these guys are just useful at the tail end of the renovation? Think again. Real estate gurus can provide you with deeper insights into your market, and even give you a hand when it comes to negotiating.
Those are the good agents, of course. Steer clear of the ones who just give you a generic flyer about the suburb. You want personalised information, not the stuff that’s been handed out to everyone. Find the real estate agent who helps you find projects for your personal patch, and even gives you little pointers on properties that they aren’t selling themselves.
Those are the good agents, of course. Steer clear of the ones who just give you a generic flyer about the suburb. You want personalised information, not the stuff that’s been handed out to everyone. Find the real estate agent who helps you find projects for your personal patch, and even gives you little pointers on properties that they aren’t selling themselves.
Solicitor: A good lawyer is an essential part of your A team. Just like your real estate guru, your legal guru is useful beyond the actual buying and selling part of things. A good solicitor can help you figure out the best business structure for your personal needs, and put up safety nets to help protect those precious assets.
Click here to find out more about Naomi Findlay’s free phone app, Rapid Reno Mate.
Your turn
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More
Need more on renovating? Read this before hiring any design or constructions pros – A Builder Reveals: 3 Things I Wish My Clients Knew
Your turn
Did you find this story useful? Tell us in the Comments below. And don’t forget to like or share this story and save your favourite photos. Join the conversation.
More
Need more on renovating? Read this before hiring any design or constructions pros – A Builder Reveals: 3 Things I Wish My Clients Knew
The number one trap for rookie renovators is to use the same strategy on every single project. Remember, there’s no one-size-fits-all strategy for renovating. What worked well in one project won’t necessarily work in another one – in fact, it can end up decreasing its value.