In the 11 years since it first aired, Australia’s obsession with television series The Block is still going strong. Ratings are consistently high and the renovated apartments from the most recent Fans vs Faves series sold for record prices. The winning property fetched $2.47 million.
But just how feasible is a career as a professional renovator? And how do you get it right?
“I think most people have it on their bucket list as something they want to do,” says Josh Masters, buyer’s agent and author of Why Property Why Now?
“They see the TV shows and it appeals to them. In reality, the logistics can be quite different.”
Don’t get the idea this is easy money – it’s not.
Real Estate agent, L.J. Hooker Kensington, SA, principal Richard Thwaites agrees. He says in his experience people who give houses “a lick and a flick” make a profit on four, break even on four and make a substantial loss on two.
“Don’t get the idea this is easy money – it’s not,” Mr Thwaites warns.
No one knows that better than part-time renovator Bree Mitchelson, who made her first foray into the property market seven years ago with her siblings.
“We found a place in 2007 that was undervalued because it needed a bit of work. We saw an opportunity to put some capital in and get a return,” Ms Mitchelson says.
Since then, she estimates they have added around $150,000 in value to the home, which they rent out to cover mortgage and rates payments.
Now, Ms Mitchelson has three properties on the go, each at different stages of completion. She works full time and renovates on the side with the help of a partner who works in the mining industry.
“You learn as you go but you’ve got to be willing to do the hard work,” she says.
“You can often buy a house at a very low price because no one wants to touch it, but don’t underestimate how long it will take. Whatever time period you’re thinking, double it.”
Full-time renovator Bernadette Janson agrees that doing it yourself can be time-consuming. She started as teenager when her parents let her renovate their bathroom and never looked back.
While she used to do most of the work herself, she found it was an inefficient way of operating and pulled back to a managerial position.
Today, she does one project a year and aims to make a $200,000 profit on each.
Think you’ve got what it takes?
Before you start, buyer’s agent Josh Masters urges you to do your research.
“Successful renovators only work in one area, usually only a couple of suburbs,” Mr Masters says.
“They know what the market is looking for and what prices are like.”
Formula for success: The price you want to sell for – the estimated cost of the renovation = the price you should buy the property for.
From there, you can estimate your budget with what Mr Masters describes as the “formula for success”: The price you want to sell for – the estimated cost of the renovation = the price you should buy the property for.
Good renovators also make the distinction between personal taste and demand.
“Ignore what you feel is beautiful and relevant and think of your target market,” Mr Masters says.
Consistency is also important, so pick a style and stick with it and know where to put your money.
“Kitchens and bathrooms are king and will take the majority of your budget,” Mr Masters says. “They are the first thing people look at.”
L.J. Hooker principal Mr Thwaites agrees that research is important but warns your profit is set the day you buy the house to renovate.
“If you go out in [popular areas] in most capital cities, you are up against people who want to do what you want to do, but don’t need to make a profit because they want to live in it,” he says.
“If you take the people in The Block, if they had to pay real market value for those places in a competitive market scenario against the other punters that want to do them up they wouldn’t be making a profit.”
Mistakes to avoid
Don’t pay too much: As Mr Thwaites says, you don’t want to pay too much for the property or you’ll never make a profit.
Don’t over-renovate: Buyer’s agent Mr Masters says a lot of people think that conversion of a one bedroom to a three bedroom can add value. “It can, but not at the cost of living space. Families need more room especially.”
Don’t do too much DIY: It’s time consuming and best left to the professionals.
Don’t live in the property: Separate business and pleasure or your relationships could suffer. Builders also have to make concessions for occupational health and safety reasons if you live on site and this can slow the process.
Don’t get overly-attached: It’s important to remember that you’re the renovator, not the potential buyer. Keep your emotions out of it.
Tips and tricks
Start small: “Buy something you can cut your teeth on,” Mr Masters says. Know your budget and work within those confines and don’t try and go all out.
Invest in landscaping: “First impressions count,” he says. “If a home has a beautiful garden it makes a huge difference.”
Look for ways to add value: One of the properties Ms Mitchelson owns she bought because she noticed a huge opportunity to add value.
“The property was advertised as four bedrooms, one bathroom,” she says. “When we went to see it there was actually a small fifth room that could become an en-suite to the master bedroom. It could become four bedrooms, two bathrooms, which really increases the value.”
Additionally, a well-located laundry can be converted to a bathroom if required.
Render brick walls: Covering bricks can make the house look instantly updated.
Keep your eye out for deal breakers: Ms Janson calls them “buyer objections” – the things that you cannot, and will not, change. If being close to a railway line makes you feel uneasy, it’s best to walk away.
Do your due diligence: “There are so many things you don’t think of especially the first time, down to door knobs or electrical stuff,” Ms Mitchelson says. She suggests going through and investigating for the presence of termites, plumbing problems and other unforeseen costs.