Although I’ve been absent from the blog over the Christmas and New Year period I’ve had the calculator not far away as I’ve done the final figures on the renovation to see if the time and effort put into the project was worth it. Whilst I’m not endorsing sharing all of your finances in a public forum like a blog I think it’s important to delve into this project to show that it’s something manageable by most people and that it won’t break the bank. For that reason, following are the basic figures about the purchase, renovation, financing, valuations and leasing of the property.
Purchase Price = $112,000
Deposit = $11200
Mortgage Insurance = $1664
Conveyancing = $1875
Total Purchasing Costs = $14739
Materials = $5187
Trades = $791
Utilities = $270
Total Renovation Costs = $6248
Mortgage amount = $102,000
Weekly Mortgage repayment = $121
Rental Amount = $160
Management Fee = $10.56
Weekly net rental = $149.44
#1 = $165k – $175k
#2 = $145k – $155k
#3 = $140k – $150k
So what does this all mean? The total cost to purchase and renovate was just under $21,000 (including the deposit). If I just purchased the property and did nothing to it but rent it out it still would have cost $14739, still would have been worth $112,000 and would be lucky to rent for $130/wk. With the renovations the valuations showed quite a range. While the first one was clearly an overestimate (get me $175k and I’ll sign on the dotted line!) finding a mid-way point and doing the comps with what is for sale at the moment (see this similar unit currently for sale) $150k would not be unrealistic. The rental amount also rose with it being snapped up for $160/wk within a few days of being on the market.
So for just under 3 weeks work the $112k property rose in value $38,000. Take away the reno costs and purchase costs (excluding the deposit) and it’s a nice profit of $28,000. Looking back now it’s great to think that for each day of work the value rose about $1500. I can imagine most people would be happy earning that!
Noting that I’ve decided not to sell but to lease it out the net rent is $149 with mortgage repayments of $121. The remaining rent totals $1456/year which will go towards rates and maintenance. Factor in the depreciation at tax time and I’m confident that this will be a positively geared property. And with over a 7% return you’ve got to be happy with that! Although there are a lot of numbers to digest, I hope that this demonstrates that investing and renovating doesn’t need to cost the earth and you can still make a tidy profit with a bit of hard work. So now it’s time to focus on the next project which was already in the pipeline whilst the renovation was going on. More on that soon…
After sorting through over 600 photos I have pulled together a few of the first and last ones to show some great before and after shots from the renovation. I hope that it provides an idea of the amount of work that was put in and the significant impact that a short-term cosmetic renovation can make on a place. Also, great news from yesterday is that we already have a tenant signed up to move in! I’m taking it as a good sign that in less than a week of being posted online and after the first inspection someone was immediately willing to sign up. Fingers crossed it all goes well. Enjoy the before and after shots!
After almost 3 weeks of work the renovation is now complete. Today I walked out of the property for the last time and I was incredibly proud of the transformation that has taken place over the course of 19 days. Starting with a property that really needed a lot of love, the place is now completely revived and livable. The last day was all about finishing off small jobs and the biggest job was packing up and removing all of the tools and equipment that had gathered in the place over the last few weeks. It’s amazing how invested you become in every element of the work being done and while there are still some things I would have liked to do I had to draw the line somewhere and call it finished. I thought that I may have been sad when I left today as there has been a huge amount of hard work and sweat put into the place but I was just really pleased with the end result and now it’s time for someone else to enjoy it.
I could not have done the job in the time that it was done without the never ceasing help from my father (and I can’t forget mum as well in keeping the team going throughout the project). More than just the foreman, he kept me sane throughout when I was about to have a meltdown over things such as a dodgy hinge or an ill fitting door handle (yes, I need to chill out). I continued to learn a huge amount from him and may have just taught him an odd new thing or two as well (he was skeptical with the bench tops but amazed with how well it worked out). My advice if you ever take on a project like this is to make sure you have a great support team, it really made this a much more enjoyable project.
I won’t ramble on but wanted to say a big thank you to everyone that has followed the work for the last few weeks, I continue to appreciate all of the great feedback. This week I’ll sit down with a calculator and do the sums. I’m really looking forward to presenting the numbers to you all and showing that it really doesn’t take much to pull off a very successful project with property investment. The property is now open for inspection and the first few prospective tenants are inspecting the place tomorrow, wish me luck!
This week I’ll be putting up a post specifically with before and after shots as I’ve had a few requests and I also love to see how the place has transformed. Clicking the original sale listing will give you a taste. But for now I’ll leave you with my final tour though 4/11 Vale St.
The penultimate day of renovating! Even if I wanted to do more the property is now up on the internet for lease (click here to see the listing) and the clock is loudly ticking.
Today was a mad rush of trying to finish off the many small tasks that remain to be able to say that the property is truly finished. This morning was time to complete the tiles by putting silicone around the edges and where they join the bench tops. If I thought the grout was messy yesterday, the silicone today was even worse. Mainly because the stuff sticks to everything and it’s a real challenge to get a nice clean edge. Several cloths were well and truly ruined in this process and tonight I’m sitting here still finding silicone (of course in the “Havana’ shade) over my arms and hands. It did finish off the tiles nicely though and the kitchen is now largely complete.
Other tasks today included finishing off the front garden, completing the wooden tiling in the veranda which I’m thrilled with, finishing some painting in the bathroom and installing a blind above the toilet. If a tenant was to move in tomorrow I wouldn’t expect any complaints from them but I’m aiming to squeeze in the very final day this coming weekend and then walk out the door and hand over the keys knowing it’s completed to the standard that I’ve been aiming for.
Today I also had a visit from Jamie my property manager to complete the photos for the internet listing which is now up (a whopping 14 views so far) and I’m looking forward to seeing how this goes. I also had a visit from another agent to complete an appraisal on the property and the value today came in at a very different value to that which I got yesterday. This really is highlighting the importance of getting a variety of opinions as just between two appraisals so far there is around a 20% difference. I must say I think I know which one is more realistic. I’ll talk more about values next week when a few more figures are available.
In the meantime check out the listing and keep your fingers crossed that tenants come flocking in!
Before writing today’s post I’ve been sitting at the desk making a list of all of the things that still need doing and I came up with about 35 things that I still need to do. If this was a week ago a lot of them would be large time consuming tasks but fortunately they are mostly small things that should not take long…I hope. I have one full day left before heading back to work and I’m aiming to get at least 25 of these tasks written off tomorrow. The remaining 10 I will class as ‘like to do’ jobs but not essential, such as pressure cleaning the outside concrete, it’s fun do do but won’t send a tenant running away if I don’t get to it. Enough about what hasn’t happened yet though, let’s talk about today.
After what seemed like a life or death decision of white vs. coloured grout, I picked up my box of ‘Havana’ coloured grout this morning, purchased a new bucket and got to work. Handy hint if you need to mix grout, get a mixing attachment that goes on to the end of your electric drill. I didn’t and it took ages to mix by hand to make sure it was well mixed through. That done though I got on to grouting the tiles. This was hands-down the messiest job I’ve had to do for the entire reno. Working across the back of the kitchen it went on easily and I got around the kitchen, bathroom and laundry tiles in just over a hour. Looking back after it though there was grout absolutely everywhere so it needed a quick clean up in the areas where it wasn’t meant to be. After waiting for it to start to set I then had to go back over it with a sponge to get the bulk of what was over the tiles washed off. In the entire process this took the longest (probably about 2 hours) as it involved constant rinsing of the sponge. Needless to say I’m sick of looking at the colour ‘Havana’ now. I left them until the end of the day to give the tiles a good clean over and they have come up well. I’ll do it again in the morning before using matching sealant in the gaps. So far the tiling project has gone without a hitch. I finished off some more painting after this and now the only painting left is in the smallest room in the house 😉
Today’s interesting event was that I made an early call to a local agent (the one that sold me the property in the first place) to get him to come in and do a valuation. Thinking it would be some time until he could make it I was surprised when he showed up at 4pm. We’d spoken a lot over the phone during the purchase but this was the first face-to-face meeting. He was impressed with the renovation and after giving him the grand tour (all 5 minutes of it) he did a few internal calculations and gave me a number. Whilst I was pleased (and somewhat skeptical) with the number he gave me, I’m keeping it under my hat for now until I get a few additional valuations and I can present my numbers to you all. I have a feeling that there may be a range come through so I’m excited to see what they are.
Now I don’t want to jinx myself but I’m taking a leap and declaring tomorrow to be the penultimate day for renovation rescue 2014.
So upon my entry back into the property this morning I’ve got to say I was more than delighted to see all of my hard work tiling yesterday was still securely fastened to the wall. The adhesive had set really hard and the tiles felt very stable and solid. Whilst laying in bed last night planning my day ahead I decided that coloured grout will be the way to go. Although I’d love to see what it looks like with a white grout, I’m thinking that tiles with white grout situated behind a stove won’t remain white for that long, particularly if a future tenant decides to get a bit Jamie Oliver in the kitchen. I think a matching grout will hide a few more cooking disasters. The colour I’ve chose will be ‘Havana’ which is supposedly a colour…
Before getting carried away with grouting though I had to finish the remaining tiles which were located behind the bathroom vanity as well as the laundry sink. These took a couple of hours by the time I prepared the surface (the vanity needed new base boards) and got all of the tiles in to place. Once again they came up looking really good so I’ll leave them until tomorrow before grouting the whole lot. I’m excitied to see the finished product.
The remainder of the day was taken up finishing painting the bathroom and laundry as well as installing a new exhaust fan above the shower. A recent Ikea purchase was also unwrapped in the form of the bathroom mirror and shelf. Those ingenious Swedes think of all the clever ways to put things together and fasten them to walls and this mirror and shelf combo was no exception. Some careful measurements, 4 screws in to the wall and it was up and looking great in about 10 minutes. I also managed to get some inexpensive bathroom accessories in the form of towel hooks and a cup holder which add to the space.
Before I wrap up today though I want to highlight the benefits of shopping around for items for renovations. One thing the laundry required were conversion taps for an automatic washing machine. Not the most common plumbing accessories but available at most large hardware stores they were looking at costing $150 when I checked them out online. Having a 10% off voucher I went to Masters and got a set for $135, I was pleased with my savings. Not so pleased the following week when I went to Bunnings and saw them out for $99. I picked up a set there and decided to return the more expensive ones. Then 3 days ago I go into another Bunnings store and what do I see marked down but the same taps for $49! I pick up a set and decide to return the other 2 sets. So although I have now spent $273 on 3 sets of the same taps, with the other 2 sets now returned I ended up with a set which is a third of the price I originally thought I’d have to pay. A pain to have to return the others but a lesson in shopping around!
Tomorrow I’m planning on grouting like there’s no tomorrow…and soon there won’t be a tomorrow (for renovating that is!)
After having 5 days back at work I’ve managed to score a highly valuable 3 and a half days back at the property due to ‘the race that stops the nation’ the Melbourne Cup (see picture to the right for my run-in this week with the actual cup itself…probably worth more than this property that I’m putting so much effort in to!). So with a weekend, a rostered day off and a public holiday I’m back renovating for a good few days in a row which I’m thrilled about. Now that I’ve got the finish line in sight (horse racing pun intended here) there almost seems more to do than ever. Not to worry though, a few major things to do in a day or two and then the rest is a range of little things in order to finish it off to the level that I’d like. The challenge I’m having at the moment though is where do I stop? It’s important to remember that it’s intended as a rental and although I will make sure it looks great it’s important to remember that it’s not going to be my home and at some point soon I need to lock the door, walk away and be happy with the finished product. Not quite yet though, let’s hear about today.
Due to other commitments this morning it was 2pm by the time I set foot in the door again and I had a big project that I wanted to complete today, getting the splashback tiles in to place. As I mentioned last week there are a lot of things I’m comfortable doing and feel skilled in but laying tiles is completely new to me so after researching as much as I could it was time to get in to it. I originally had a multi-coloured mosaic pattern in mind which you may have seem in a previous photo. With the success of the benchtops coming out as a speckled colour I thought it might be all a bit too much going on so I decided to go for a single colour. Tile adhesive at the ready I got to work. After marking out the area to ensure straight lines it all happened reasonably quickly as the mosaic tiles are in large sheets. The wall behind the oven was straight forward and it got a bit fiddly across the top of the sink and around the power point but as it all comes in a sheet a pair of scissors cut it into shape and you can barely see where one sheet joins the next. I’m confident this will further be blurred once I get the grout in.
The project probably took about 3 hours to do and I’m really pleased with the result as it’s really showing what the finished product will look like. The big question now is do I go with white grout or coloured grout to match the tiles? Any thoughts appreciated.
Tomorrow I’ll be tentatively opening the front door in the hope that they have all remained on the wall overnight!
After the painting in the lounge yesterday, today I felt a lot more confident that we could easily get through the kitchen and have it looking good by the end of the day. Once again it was ceilings first and then walls. One thing that I did today after the ceiling had dried was to replace the ceiling fan. Years of cooking grime had accumulated in the old one and it’s an easy update to give a more modern look. For around $20 you can get a new ceiling fan and replace it yourself as there is usually a plug mounted in the ceiling cavity so no electrician is required. 2 minutes…done! Whilst the first coat was drying back on went the over counter cupboard doors which had already had a fresh coat of paint and a set of the new door handles, easy. We also put back on the larger cupboard door in the lounge that had the ‘concealment device’ for the old hot water system as designed by the foreman. It came up really well and you’d never know what it is hiding (see the pictures below).
When the property first settled one of the very first things I did was to get in and measure up the windows for new window furnishings. Ordering blinds can take a long time but fortunately the venetian blind I had ordered arrive early this week (just in time). I ordered through www.blindswholesale.com.au who are based in Sydney and I found their prices to be some of the most reasonable for made to measure. The annoying thing with older places are that many of the windows, door handles etc are in imperial measurements so it’s difficult to get things that fit ‘off the rack’. It’s an expense to be aware of. Once the blind was up though I was really pleased and looking at the before and after pictures below you’ll see what a transformation the kitchen window has had compared to day one.
The afternoon was finished off with the second coats of paint and after that it was finally time to take all of the plastic covers off the kitchen cupboards, lift up the drop sheets and see what the finished product looked like. Unfortunately my current time frame is not going to allow for me to get the final feature of the kitchen finished until next weekend now (work beckons), from the pictures below I’m sure you’ll be able to see what this final feature will be (note the unpainted sections).
Overall the kitchen looks completely refreshed compared to the original and I’m thrilled. I’d even be game enough to cook a meal there now after mum gave the oven a good once over today. It’s amazing what 4 year old oven bake chips look like, think Amazonian shrunken heads but with more potato. There are a few 10 minute things left to complete in the kitchen such as sealant around the sink and some trim around the cupboards but it’s very close now.
Tomorrow I walk back in to the property after 2 flat out weeks and evaluate where we are at and importantly what’s left to do!