Last Updated Oct 11, 2017 · Written by Rob Schneider
We've all heard stories about people who "flip" houses for a living. How do they manage to buy a house, renovate it and sell it within 12 months? Professional renovators know a few simple secrets that make it possible.
Professional renovators look for the worst home in the best area. It can be in an established area or an up and coming area. While other buyers just drive past a home with peeling paint, an overgrown garden or a fence that's falling down, they stop and take a closer look.
Professional renovators know from experience that these types of houses sell for far less than the cost of renovations. They know from early failures that they have to look behind the surface flaws and be sure the house doesn't have structural defects that will wipe out any potential profits. To that end, they hire a building inspector to do a pre-purchase building inspection.
A building inspector will do a thorough check of the property, both inside and outside. With years of experience behind them, they will be able to spot potential problems a buyer may overlook:
Their report will list everything they see. From their report, you can decide if something needs to be explored further. If they find cracks in the walls, for example, is that an indication of a sinking foundation or is it a minor problem? To find out, you may need to take the extra step of hiring a structural engineer to inspect the property.
They may take it a step further and have a termite inspection or asbestos inspection. While inspections cost money, professional renovators know from experience that the money is well-spent. If the house has major damage, they are saving tens of thousands of dollars for an investment of around a thousand dollars.
If the house only needs cosmetic renovations, a professional renovator will know they're on to a good buy. They will make an offer and if the offer is accepted, they will start organising trades before the sale is finalised. Doing this ensures the trades can start working as soon as the sale is final.
Professional renovators already have tradies they can trust. If it's your first time renovating an older home, you will need to get quotes from tradies. The lowest price isn't always the best price. You need to know all your trades are reliable. They need to:
Professional renovators know how to schedule trades in the right order. A garden maintenance crew can clean up the yard at the same time a carpenter is working indoors, but in other instances, one trade relies on another to complete a job first.
If you want to sell within 12 months, scheduling trades is vitally important. Renovations take time. If they are not done in the right order, they can cost you money and your renovations will take longer. For example, if a plumber or electrician shows up on the day they're scheduled to do their work, they will charge you for showing up even if they're unable to work. Then you will have to reschedule and they may not be able to come back on the ideal day. This can set all your trades back and can have a snowball effect on your renovations.
If you have extensive renovations to do, it might be worth hiring a building consultant to help you schedule your trades. A good building consultant understands Australian building standards and knows what order jobs need to be done in.
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Cherie Barber is a renovation expert. Like all experts, she learned by trial and error. She shared some of her secrets to adding value to a property with hipages. She told us that some renovations such as plumbing, electrical work and roof repairs may need to be done, but don't add value to a property. Renovations that give the biggest "bang for the buck" are visible renovations such as painting, cleaning up the garden and renovating the kitchen and bathroom.
Painting and garden cleanup can be DIY projects, but aren't expensive even if you hire professional painters and a landscaper. Painting and landscaping give the greatest return on your investment, but you may need to do other, more expensive renovations such as kitchen and bathroom renovations.
We all have budgets and it's possible that you may not be able to afford to do all the renovations you'd like to do. Cherie Barber recommends doing the renovations, but scaling back on the costs. For example, she says a "laminate floor can offer the feel you're after without the price tag of timber floating floors."
Here are some hipages articles that can help you save money on your renovations:
Buyers want the home to look like they can move in and feel comfortable without having to do renovations. They aren't necessarily looking for granite benchtops in the kitchen and a bathroom that looks like a spa. A budget renovation can add value to your home and perhaps add more value than an expensive renovation. How much does a bathroom renovation cost? goes into the details of budget, standard and deluxe bathroom renovations. Read What is the Cost of a Kitchen Renovation? to find out the range of kitchen renovation costs.
If you want to sell your newly renovated house within the 12 month timeframe, the real estate agent you choose is going to make a big difference. A good real estate agent will know how to fetch the highest price for your property in the shortest amount of time.
Aside from the real estate agent's commission, you may need to pay for advertising. Some types of advertising you might need to do include:
Today, online advertising is the most effective type of advertising. Most real estate agents have their own websites and will advertise your home on their website. You might want to take it a step further and advertise on the large real estate sites that cover all of Australia. Millions of people across the country and from overseas use those sites to view properties. Spending more on online advertising can create greater interest in your property and a higher price.
If you're having an open day, a flyer or brochure is a must. People tend to make a day of it and inspect several properties on weekends. Your property will stand out in their memory if you have a professionally produced flyer or brochure available for them.
In some cases, selling at auction can be a great way to sell a house. Some experts say auction sales work best for properties with unusual features. If your house doesn't have unusual features, it may be better to put it on the market and take offers. A good real estate agent will be able to help you decide how to sell your house.
So now you know how to buy, renovate and sell in 12 months. Of course, you may make some mistakes on your first try, but you also know how to avoid the most expensive mistakes. That gives you a far greater chance of making a big profit on your investment.