澳洲Australia property Reno and sell example (Sorry i wrong area

在澳大利亚


(Copied from another thread)

Hi,

I am reading the book "Think and Grow Rich in Property" by Stuart Zadel. The Second chapeter is written by Steven Tolle & Cherie Barer and deals with Reno's. And I'm half way through that chapter. Anyway...

I reckon that it would be a fun hobby/2nd job. I am thinking of doing 1 cosmetic reno to an appartment, just to keep it easy and not too expencive (I'm not a handy person, but I know tradies).

I just started today (but dont plan on doing anything until december), and saw an apartment in Dandy (Vic) for $200k, which needs some cosmetic work to bathroom, kitchen, and get rid of carpet. Looked at another apartment with same numbr of rooms, same distance to Dandy CBD, and it was going for $240k plus. So using this as only an example, what would be the costs of the makeover and what would be other costs, ie REA, bank fees etc.? Also, how long do reno's normally take?

Any replies would be appriciated, and I'm sorry if this isn't the right spot to be posting these questions.

Cheers  

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i too would like to know

every so couple of months, there are TT/ACA reports of simple people, often young women who buy one property after the other, rennovate and sell off, often without have never done any handyman work.

so if these people can do, so can anybody else

so for the example of dandenong, should first timers start off in a further from CBD area, or just work on simple rennovations eg. paint, kitchen replacement, and flood boards? and then move onto more major projects?  

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happy too!:)
renovating a home or unit depends on the type of place you have , how much handy " person" skills you have, and the trades you know, it can be alot of fun, or a nightmare gone terribly wrong resulting in the bank taking a half guttered house, and trying to sell your other one.
NOTE: renovations, cause divorce, i have seen it, not always but it does?:rolleyes:

if your good at handy work, then go for it the biggest killer is the holding costs, allowing the time in there, being 8 plus wks, and the scope of works being completed, keep it simple makes for quick turnover, get tradeies to work on top of each other, "no pun intended" they don't like it and will want to come back another time. but its just too bad. the time is the killer.
if you have started a project and some weekends you "don't feel like it" you have already lost, kids , husbands and wives need to understand , you must proceed with the job, regardless.
allowing time depends on the job, asking me or someone else, how long will it take enlightens me to the fact your not ready to do it yet, learn more.
get time scheduals, on making and installing a kitchen, striping and building wetareas, removing wallpaper and new paint, carpet delivery, rendering, and gardens, if you are using trade, get quotes, and times allowed, and allow another 20%, allow 12 wks marketing, and sale.
these are specific to the property you intend to do up.
do this home work first start buy counting all the time, and then the $$$ and re assess the questions, and i will be more than happy to answer them, cheers craigb:)  

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Lisport, this how the numbers may look like in your example. The renovations numbers are only an estimation.

Purchase Price $200,000
Stamp Duty $ 7,779
Legals $ 800

Assumptons
20% deposit
5.21%
Interest only loan
Selling commission 2.2% (inc GST)
Marginal tax rate 30%


You will need to $48,979 to complete the purchase. Your interest only repayments are depending on a 30 or 31 day month, $686.57 or $709.51 per month respectively. At the same time you will need to have $15,000 available to undertake the renovation

Holding costs are based on 12months with the first payment on 15 Dec 09

Selling Price $260,000
Commission $ 5,720
Advertising $ 500
Legals $ 800

Net Sale
Proceeds $252,980

Renovation
Renovation $15,000
Holding Costs $ 8,296

Total Reno Costs $23,296

Net sale after
reno costs $229,684

Initial Property
Acquisition $208,579

Profit
(before tax) $ 21,105

50% CGT
discount $ 3,165

Profit after tax $17,939

This does not take into account expected interest rate increases that have ben flagged and written about. A 0.25% increase in the interest rate increases holding costs by $400 over 12 months. This means an after tax $280 impact

If you are using the $15,000 you may also want to take into account the cost of not using those funds in being placed in an offset reducing your loan payments.

There might be some other smaller tax matters that I haven't referred to here, but the question for you is based on those parameters, is an after tax profit of $18k in one year worth it?  

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[QUOTE
I reckon that it would be a fun hobby/2nd job. I am thinking of doing 1 cosmetic reno to an appartment, just to keep it easy and not too expencive (I'm not a handy person, but I know tradies).
Also, how long do reno's normally take? Cheers[/QUOTE]

I've been doing exactly this for about 10 years and 12 properties later. I began with NO experience, or any knowledge with renovations or handyman skills, yet miles of common sense. :D

If you have a well paid day job, then this probably isn't for you. My profession as a musician doesn't interfere and augments the relatively meager income very well, allowing me to be the stay-at-home Dad who has the time to renovate, in-between gigs.

If you need to pay tradies for most jobs, it's not worth it.

If you don't live in the property, I'd suggest it's also not worth it - Capital Gains Tax etc...

You need to develop the skills necessary to turn the house that no-one wants, into something that's desirable. This usually means far, far more than just a paint job.

Example: I've just listed our house for sale in Frankston. No-one wanted this place originally. Major work required yet at my skill level. Sat on the market for months. You gotta have the vision that most people don't have, in order to spot the potential. These are the properties you can usually buy cheaply.

Paid $240k less then a year ago and is now valued in the low $300's. Spent about $15K on it. Factor in around 15K in fees and I end up with some semblance of a wage for the year.

For me, I find this kind of work fairly easy and very rewarding on many levels, compared to music, where the talent, skills and years of endless practice required to even do a gig at a professional level, make most other jobs seem like childs play.

Just my take on this yet follow your dreams, if that's what you want to do, then go do it! :D  

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Thanks for the replies guys, especially buzzlightyear for giving me rough figures. I think its do-able, but like craigb said, i need more knowledge nd experience  

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oneuppmanship said: ↑
I've been doing exactly this for about 10 years and 12 properties later. I began with NO experience, or any knowledge with renovations or handyman skills, yet miles of common sense. :D

If you have a well paid day job, then this probably isn't for you. My profession as a musician doesn't interfere and augments the relatively meager income very well, allowing me to be the stay-at-home Dad who has the time to renovate, in-between gigs.

If you need to pay tradies for most jobs, it's not worth it.

If you don't live in the property, I'd suggest it's also not worth it - Capital Gains Tax etc...Click to expand...
I admire your initiative, but isn't what you're doing illegal without a builders' licence?

Also, if your intention is to renovate for a profit, wouldn't this negate a PPOR exemption and make you liable for full CGT on every project? (ie Doing it for a profit also nullifies the 50% discount if held over a year.)  
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