Renovating for profit – tips from Chris Gray

It’s the Holy Grail for many property investors – buying a property, renovating it, and then selling it for a profit.  But while it sounds relatively simple, there are many investors who have had misfortune when pursuing this strategy, due to budgets and timeframes blowing out, arguments erupting and the like. 

 

Chris Gray, host of Sky News Business’ ‘Your Property Empire’ and Financial Judge on Network Ten’s ‘The Renovators’ has had nearly 20 years of experience in the residential property industry, particularly in his role as CEO of Empire – which searches, negotiates and renovates properties on behalf of time-poor professionals.  He recently shared with CENTURY 21 his thoughts on what property investors need to know in order to complete a successful renovation on time and on budget. 

1.       Choose properties that need mainly cosmetic work

 

Chris advises that investors avoid properties with structural damage, as this is often when expensive problems occur.  According to Chris, if you already own the property you definitely need to leave that part to the experts. 

2.       Find a valuer

 

Chris notes that one of the biggest misconceptions investors have is that the more they spend renovating a property, the more profit they will make.  This isn’t always the case and investors need to be careful of undercapitalising as well as overcapitalising.  A valuer can tell you if your $30,000 kitchen renovation will actually add $30,000 to your home’s value.

3.       Be realistic when doing it yourself

 

According to Chris, most novice renovators attempting DIY go under budget when estimating the costs.  His tip is to double your expected cost and timeframe and then work out if you’re still going to make a profit. 

 

He also advises that investors add up the cost of taking time away from a job or family and see if the potential profit outweighs the potential risk.

4.       Use a project manager

 

Chris advises that there are too many risks involved in managing a project alone.  Some tradespeople capitalise on investors’ lack of experience – in terms of cost, timelines and attention to detail.  Handling the renovation yourself could save money initially, but hiccups along the way might turn your $40,000 renovation into a $60,000 - $80,000 job in the long run – not to mention the added time it might take.  Each week you go over time is a week’s lost rent or extra mortgage repayment. 

 

According to Chris, using a project manager will often get you access to trade prices rather than retail, so it may well pay for itself straight away. 

 

Chris notes that when investors do their research, purchase a property well, renovate correctly and with the right advice, renovations go well - potentially resulting in owners earning tens of thousands of dollars in equity in the first year alone.  According to Chris, “even if the property market hasn’t moved in your local area, renovations can create artificial growth in your property’s value.”

For more information about Chris Gray, please visit www.yourempire.com.au

Posted by Charles Tarbey on 26/03/2012 at 9:48 AM | Categories:

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