Renovation Advice, Tips & Strategies

We live in a time where DIY renovations are becoming VERY common. It’s not often that I come across a client who is NOT afraid to take on some form of renovations to their new property purchase. When you mix TV shows like “The Block” and “Fixer Upper” (my personal favourite) with a little motivation, we are easily encouraged to take on such huge challenges on our own properties. The question is, how do we do it most efficiently?

EFFICIENCY IS THE ABILITY TO AVOID WASTING RESOURCES, TIME AND MONEY, IN PRODUCING A DESIRED RESULT.

The following is a list of real lessons I have learned first-hand during my personal journey as an Investor/Renovator. Lessons that have always taken me a few steps back, but have been invaluable towards my growth, success of my goals, and my continued steps forward.

1) PRE-PURCHASE ASSESSMENT

Choosing the right property to buy is the first and most important decision you will make towards minimising your renovation costs. When evaluating your options, it’s important to consider just “how much work” the property is going to need – outside of the general “sprucing up”.

Big things to think about:

  • Are there any structural problems that need to be fixed after the purchase?
  • Are there any improvements required, that may require council approval?
  • Does the kitchen need to be replaced or can I just “revamp it”?
  • Will the bathroom need redoing?
  • Are the current appliances usable or will they need to be replaced?
  • Are there any external/environmental elements to consider e.g. termite damage?
  • Is the current layout appropriate or could it be improved?

The above items should follow onto two more questions…

  • How much am I willing to take on?
  • Is the extent of renovations required, reflected in the asking price?

2) TO FLIP OR TO HOLD…

During the purchase process, you should have an idea of whether you are planning to flip the investment or hold onto it over time.

If you are planning to flip the investment property, you will need to base your renovation return on the resell price alone. If you are planning on holding the investment (and renting it out), then your return on renovations can include a combination of increased equity/growth as well as the proposed increased rental return, depreciation etc.

3) MINOR OR MAJOR?

Before you get too excited about which tiles to choose, it’s important to have a good (realistic) think about how far you are going to go with your renovations. Are you about to undertake minor cosmetic renovations or full-blown structural alterations? I would recommend that you don’t spend more than 5%-10% of the purchase price on renovations for your investment property. To put it in perspective, you want to be sure that you will make your money back (through increased property value and/or rental income). I often see people get carried away with emotional choices of improvements they like rather than spending money based on what is most financially efficient for the investment.

4) PROGRAMME!

In my personal experience in the construction industry, I’ve seen multi-million-dollar projects saved from an intelligent review of the Project’s programme. I can’t stress enough how important this is.

I’ve had trades people refuse to be part of my renovation process because they didn’t like how tight my programme was. A lot of professionals you hire do not want to feel rushed (understandably), but it is important that whoever you hire, understands your programme, timeline and the importance of reliability.

Programme Must-dos:

  • Write a solid progamme prior to renovations – this way, you will have a clear understanding of how to book your trades in. If you are managing the works on your own, make sure you educate yourself on what order to place the trades – some need to follow one another and some can be carried out at the same time.
  • Review the programme EVERYDAY – things will change on your “work site” constantly. Trades may take longer to be completed, additional tasks may be added to the schedule and people will be unreliable so always keep “re-organising” as required.
  • When you engage a tradesperson, ensure you are clear on how much time they will require. Some companies can provide a team of 10 and complete the work in 2 days, or a team of 2 and complete the work in 10 days. It’s up to you to determine if there is more value in time saved or money saved in this case e.g. an additional week of renovations can cost an additional week in mortgage repayments (without rental income). Always look at the hidden costs.
  • Step (or stagger) works to be done on top of each other e.g. if the plumber is in the bathroom on Tue – get the Painter to start in the kitchen at the same time. The more diligent you are with your time, the less you will pay on holding costs during the renovations. There are times when I’ve had 6-7 trades working simultaneously in a property. You MUST, however, be organised. The time of these professionals must be respected so ensure you confirm accurate start times with them, and keep them informed of any unexpected changes.

5) QUOTES, QUOTES, QUOTES

The value of a good tendering process is something that will make or break your budget. When conducting renovations, it’s not outrageous to obtain 5+ quotes for a particular service or material. There is also a fine balance between sacrificing quality for cost. I suggest that every trade is assessed case by case – sometimes its ok to choose the cheapest option, but for the more important items, I look at both quality and cost.

Quality – Determining quality can be as easy as good research. Read online reviews (a lot of them). Hire trades from sources that you know and trust (that are tried and tested). Meet with them, talk with them and use your instincts to choose professional, friendly people to assist with your renovations.

Cost – You have two options when obtaining costs for professional trades:

  • Providing a Scope of Works (SOW)
    I personally like to provide a SOW to the Company’s I’m requesting quotes from. This enables a clear understanding of what I’m asking to be included in their costs/work e.g. if hiring a painter, I may want to ensure all paint and materials are included, all wall defects will be filled, sanded, cleaned as well as the number of coats to be carried out. If you provide this same SOW to all painters for a quote, you can compare apples with apples and it will save you a lot of time with comparing options.

GST is also a big one. I can’t tell you the amount of professionals that advise you their price is “exclusive of GST” when it’s too late to back out. Always be clear on what you are receiving for the price you are paying – and make sure it’s in writing!

  • Reverse Scope of Works (SOW)

If writing a SOW is too much for you, you can always do the process in reverse and ask them to provide you with a clear SOW (not just a price). You will end up with the same information, it may just take a little longer to tweak the inclusions and compare all quotes equally before you choose which is the best option for your renovations.

The last thing to consider when obtaining quotes – is it cheaper for you to provide the materials and have someone provide the service separately or hire someone to “supply and install”. It’s always best to look into both options (where possible). Always speak to your tradespeople during this process as some like to only use materials they are familiar with.

6) WASTE NOT, WANT NOT

While you’re in the midst of renovation chaos, the last thing you’ll probably be thinking about is retaining materials. This could be as small as saving the ends of the timber cut offs through to keeping old taps and pipes. These items can be cleaned up and reused in this renovation or held onto, for future renovations. This will save you hundreds to thousands of dollars along the way so do it when you can.

Financial efficiency is always in the detail… That means that every dollar you spend (and save), however small it may seem, all adds up.

7) FOR GOD’S SAKE, DON’T MOVE YOUR SERVICES!

A little helpful fact – moving services e.g. water, sewer, gas; is expensive. When you are planning your renovations, try not to move the toilet, oven, sink etc. this will save expenses and time overall. If you do move these items, try to put them close by the original location.

8) DIY PROJECT MANAGEMENT

I’ve seen people hire a Builder or Project Manager for the smallest of things and it makes me scratch my head sometimes. Understandable if you are short of time or if the project requires a licenced Builder – then hire away! But if you educate yourself enough and have a reasonable amount of organisational skills, there is no reason why you can book in trades, write a programme and supervise the works being carried out.

If you are going to Project Manage your own renovations than you should try to be present at all times. During each of my renovations, I’ve been present for the works at least 90% of the time – the other 10% I’ve probably been at Bunnings or Reece! During the times I’ve been “out”, there have always been things that have gone wrong, unfortunately. If you aren’t there to supervise the professional trades you hire, they may make a mistake, misunderstand instructions or make important decisions on your behalf. Being present will save you money and time and keep you in control of what is being carried out.

9) GET YOUR HANDS DIRTY

When I say I’ve renovated… I’VE RENOVATED. I’ve built wall framing by measuring and cutting timbers with a drop saw. I’ve jackhammered tiles off bathroom floors and walls. I’ve rolled in barrel after barrel of wet cement to raise floor heights, and I’ve demolished many walls and kitchens over the years. Any work that you carry out with your own hands, will save you from paying someone else to do it. Just remember to use protective wear such as safety glasses and gloves, have a clear understanding of what you’re undertaking and always have someone with you.

All in all, I believe that anyone is capable of renovating – you must, however, be prepared, organised, motivated and relentless to efficiently carry out renovations on your investment property (and finish them off in a timely manner). It is not an easy task, so brace yourself for long hard days, but also a lot of fulfilment and satisfaction.

NOTE: Any information in this article is general in natural and pertains mostly to investment properties (not owner occupier). Please discuss any renovation plans with your building professionals and be sure to go through the necessary process for any required Council approval.