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How much should you pay for a reno property?

By Naomi Foxall โ€ข 1 Comment

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One of the hardest things to know when buying property is: what exactly is fair market price? Especially in hot markets like Melbourne and Sydney, where desperate buyers and cashed up investors fork out eye-watering sums for properties they probably wouldnโ€™t have given a second glance five years ago.

reno propertyFront of house – before

If youโ€™re buying a property as a home, then maybe thereโ€™s a permissible margin for the, โ€œI just love thisโ€ factor. But when youโ€™re buying a property you plan to renovate and sell for a profit, thereโ€™s no room for emotion; itโ€™s all about the facts and the figures.

And the key figures you need to be reasonably assured of in order to make that profit is:

  • How much the renovation is going to cost (see some of my indicators that you might be about to overcapitalise here)
  • What the property is going to sell for post-renovation
  • The price you need to buy that property for in order for the numbers to stack up.

So in a sense, youโ€™re working backwards, with the forecast sale price as your starting point. And how do you predict that elusive figure? Research, my friend, and lots of it. Itโ€™s what I call โ€œdue diligenceโ€ in my renovation workshops.

How to do your ‘due diligence’ on your reno property

reno propertyFront of house – after

There are many aspects to this due diligence, but essentially youโ€™re studying market conditions in forensic detail in order to sift out the suburbs โ€“ and the types of properties in those suburbs โ€“ that offer the most profitable renovating prospects. For example, you need to establish pricing disparity between renovated and un-renovated versions of the same type of property. If you find thereโ€™s very little price difference between the nicely renovated terrace and the rundown one in the same street, then clearly youโ€™re unlikely to turn a profit. Move on.

Become a property expert in your target suburb: best and worst streets, new developments, local infrastructure, council restrictions on what kind of renovations you can and canโ€™t do, etc.

Study past and current market conditions to establish thereโ€™s been decent capital growth in that suburb, and that the growth is likely to continue. Thereโ€™s usually a knock-on effect when a popular suburb gets too pricey; the ugly stepsister next door suddenly looks a whole lot more attractive.

These are just some of the pieces of the puzzle. Clearly, thereโ€™s a whole raft of issues and costs to weigh up when youโ€™re talking about one of the biggest investments youโ€™re likely to make. But whatever you do, donโ€™t just trust your gut!

Pore over the figures, put in the research and get a really accurate handle on what properties are selling for in your target suburb โ€“ only then can you be reasonably confident of what that rough diamond is really worth.

Cherieโ€™s next 3-day renovating workshop in Sydney is May 19. See details for the workshop here

Cherie Barber is the director ofย Renovating for Profit, a company that teaches everyday people how to buy and renovate properties for a profit.ย 

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February 13, 2017

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Swipe for after! What a fab, yet sympathetic, mak Swipe for after!

What a fab, yet sympathetic, makeover of this untouched (but not in a good way!) 50s house by @sellinghousesaus See all the rooms on the blog now via link in bio.

Great use of small space and working with the retro feel of the home while still modernising it.

Bravo @wendymooreedit ๐Ÿ‘

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@andrewtwinter
There's nothing like ticking off little jobs! We f There's nothing like ticking off little jobs! We finally knocked out our 60s brown tile back step and replaced it with a smaller grey one made from @trexcompany Island Mist decking to match our deck (that went in 4.5 years ago) and now painted brick exterior. Making the step smaller allowed us to add in an additional manhole under the back door too to allow easier access under the house at the back. And we made a cover for that too (final slide) using Trex. I say "we" but I really mean our handyman ๐Ÿ˜‰ One plank was enough for both jobs. Why we didn't do this ages ago I do not know but it's done now! ๐Ÿ˜ Installed with @trexrainescape to ensure it stays dry and lasts!

Disclosure: Plank of Trex decking was gifted. I paid for the handyman.

#backstep #doorstep #deck #decking #deckdesign #deckideas #compositedecking #trex #trexdecking #greydecking

Mat from @doormatau
Me and @fantasticfurniture go WAY back! When I fir Me and @fantasticfurniture go WAY back! When I first came to Australia in my 20s, it's where I headed to buy everything I needed for my first apartment at an incredible price! And I've loved watching the range get more and more impressive over the years as my knowledge of furniture has increased. I had no idea how extensive their Aussie Made sofa range was though. I'd love you to check out the options via link in bio as I think you'll be impressed! I think we have a renewed appreciation for Aussie Made and supporting local manufacturing and jobs and this is a great success story. We love a bit of high low decorating, and turns out Fantastic Furniture is a great place to find your family lounge, a special accent chair, an extra ottoman for occasional seating and so much more. 

#fantasticfurniture #aussiemade #australianfurniture #FindyourFantastic #FantasticFamily #affordablehomewares #affordablefurniture #custommadesofa #custommadelounges #australianhomes #interiorsblog #interiorsaccount #interiorsaddict #theinteriorsdaddict #jenbishop #heartyourhome
Please don't show my boys this room or they'll wan Please don't show my boys this room or they'll want one like it!

How gorgeous is this Brisbane kids' bedroom?! 

@brittwhitestudio worked closely with the boys (aged 7 and 9) to understand their needs with a bespoke bunk bed solution crafted by BRC Cabinets, featuring ample storage as well as an under-stair hidey-hole, a useful reading nook for books and a built-in charger for electronics. Local craftsmen Emmettโ€™s Ropes designed and hand-tied the ropework on the top bunk and the supporting pillar beneath.

Head over to the blog via link in bio to see and read more!

#bunkroom #bunkbed #bunkbedsforkids #bunkbeds #bespokebunkbeds #custommadebunkbeds #sharedbedroom #sharedbedroomforkids #boysroominspo #boysroomdecor #junglebedroom #kidsroomstyle #kidsroomstyling #childrensrooms #theinteriorsaddict #interiorsblog #interiorsaccount #interiorsaddict #jenbishop #heartyourhome #brittwhitestudio #highriseliving #apartmentlifestyle #penthouses #apartmentlivingwithkids #newsteadbrisbane 

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Just 3 of the kitchens in the @duluxaus Colour Awards 2023 shortlist which will give you some serious inspiration!

Loads more gorgeous residential rooms to see on the blog this morning via link in bio.

Projects by @studio__bright @kaiko_design and Georgie Shepherd Interior Design. Pix by @arorygardiner @fiona_susanto and @christophermorrisphoto 

#duluxcolour #duluxpaint #duluxaus #duluxcolourawards #duluxcolourawards2023 #moodykitchen #allwhitekitchen #designerkitchen #sagekitchen #boldkitchen #colourfulkitchen #colouredkitchen #theinteriorsaddict #interiorsaddict #jenbishop #heartyourhome #interiorsblog #interiorsaccount
We're a bit obsessed with Cara Standen's balcony m We're a bit obsessed with Cara Standen's balcony makeover using @kmartaus stone tiles!

Nineties townhouse in Lennox Head or villa in Greece? You decide! All up it cost $2000 including all materials and she did the work herself.

Read all about it via link in bio now.

Love your work @twin_palms_lennox

#kmartaustralia #kmartdiy #kmarthack #kmarthome #modernmediterranean #balconymakeover #balconyideas #diybalcony #budgetdiy #interiorsaddict #theinteriorsaddict #jenbishop #heartyourhome
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What do you reckon? You'd think it would be overkill but it isn't because so many of the designs are subtle yet still impactful.

Head over to the blog to see how @grafico_walls transformed this blank canvas Melbourne townhouse with their products, which you've probably seen on The Block over the years. And read how Damian Corney has grown this Melbourne business with wife Adele and a growing team. There's also a look inside the very cool Motley Hotel which has used a whopping 4km of their wallpaper throughout!

You can also watch a video tour with Bec Douros as the house featured on Open Homes Australia over the weekend.

Via link in bio now.

#wallpapergoals #wallpaperdesign #australianwallart #australianwallpaper #wallmurals #wallpapermural #wallpapermurals #wallpapereddoor #digitalwallpaper #digitallyprintedwallpaper #customwallpaper #wallpaperaesthetic #wallpapertrends #wallpaperaustralia #grafico #graficowallcoverings #melbournebusiness #melbournesmallbusiness #openhomesaustralia #theblock #becdouros
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Braved the rain second morning in a row to feed the animals at @edenfarmescape because life's too short to worry about a bit of mud and drizzle!

Feeling relaxed ๐Ÿฅฐ
Did you see this cracking little transformation on Did you see this cracking little transformation on @sellinghousesaus last night?

We have all the finer details on the blog today via link in bio. Particularly love the kitchen refresh using the existing blue cupboards which really weren't doing anything for me before ๐Ÿ˜‚

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About Naomi Foxall

Naomi Foxall is a freelance writer, content and social media manager, living on the NSW South Coast.

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Comments

  1. AvatarJean P Saunders says

    February 17, 2017 at 1:24 pm

    The above statements are the foundation on where and when you make a profit from your Reno but sadly so many people buy on emotion.. or on that hot tip that had passed its used by date

    Reply

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