The visit to the building site in February was the last time that we were able to set foot inside the building. From that point on it was a monthly drive past to see what the progress was from the outside and only being able to guess what things were like inside. In early March, progress had continued on the exterior with some of the finishing touches added to the brickwork and roof, as well as the fencing starting to go up. The concreting for the driveway had also gone in and the leveling of the front yard had been done.
Brickwork and facade is complete
The front yard has been levelled out
Driveways have been completed
The supervising team gives their stamp of approval!
A month later in early April on a dreary and rainy Ballarat day it was time for the next sticky beak and things had really progressed to a stage which was getting so close to completion that I could smell it (or it may have just been the smell of the paint drying). The fencing was finished outside, exterior painting was complete, letter boxes were in and even the lawn had been seeded and had started to grow. And for the next month the emphasis was literally on watching the grass grow.
The new lawn is under the water somewhere
Fences and letter boxes are complete
A view up the driveway towards the front of the block
Looking over the fence into the backyard,
Again, one month later at the start of May it was time for another visit and as noted, it was all about watching the grass grow…which it had. Aside from that, the landscaping was completed and it was now time to wait for the official subdivision information to be approved and then a settlement date could be set. Fortunately that didn’t take all that long and FINALLY it brings us to the current day! No more posts about things that happened 6 months ago. Tomorrow I’m visiting the site to have my pre-settlement inspection before the keys finally get exchanged next week (all going well). After 3 months since last stepping through the front door I’ll finally set foot inside to see the finished product. Watch this space in a few days to see what the finished product is like!
The grass has certainly grown!
And there are plants in the garden beds
It’s as good as finished
The communal parking area for guests
The last post saw the property on Boxing Day of 2014 and although it was no showpiece it was exciting to see the frame and roof of the house complete and to get a feel for the space and layout. With the Christmas and New Year break falling right in the middle of summer in Australia the world comes to a grinding halt so I wasn’t expecting work to recommence until the second week of January at the earliest. Still not having commenced the bricklaying and with all of the internal plastering and fit-out still to go I though I’d give it a month after the summer break before I returned back for another look to check out the progress. I was hopeful that the bricklaying would be finished and that internal work would be commencing soon. Not being a tradesman myself I’m clearly no good at estimating how long work takes. To my pleasant surprise when I returned at the start of February 2015 (yes, I’m finally writing about this year!) all of the brick work was complete and things had been firing along at a great speed inside. Now usually in a situation like this people that are not actually building the house (ie: me, Mike, mum and dad) aren’t often allowed on the building site in the off chance that we trip over a hammer or incidents such as this occur (although these seem to be largely based somewhere in Eastern Europe). But the great thing about having parents that will talk to anyone (and always seem to find some connection) is that before you know it the builder is inviting you in and showing you around. Inside, the plaster work was largely complete, the bathroom was coming along with the bath installed and much of the vanity in place, doors were being hung that day and even the majority of the kitchen cabinetry was in. It’s amazing the transformation when you actually have solid walls in place and you are able to walk through rooms. Even the parents were impressed. We left feeling really pleased with the progress and it finally gave me the feeling that the end was in sight.
Looking from the front at the finished brickwork
View from the lounge towards the front door
Looking from the master bedroom to the front of the house
The lounge and dining area
The smallest room in the house
The kitchen cabinets have gone in
Mike and mum evaluating the quality of the workmanship
The bath is in, tiling yet to be complete
The bathroom vanity
The view down the main driveway, our property is to the left of the ute
After celebrating the construction finally commencing in September 2014, the challenges of the 2014 renovation rescue took over my life and because I was up to my eyeballs in painting, landscaping and kitchen bench resurfacing, I left the builders to do their job and didn’t get a chance to visit the construction site for a number of months. A quick drive past the site in October saw all of the slabs poured but because there are 15 in the complex and our build is right at the front we were still waiting to see any major progress as the builders had commenced construction from the back of the block and were working forward. It wasn’t until late November that I managed to drive past and see that framework had gone up for most of the properties (except ours…) and it was Boxing Day in December when I really got a pleasant surprise with the progress of the work as you will see below.
By the end of December 2014 the framework was up, the roof and tiling had gone on, windows and external doors were in and the bricks had been delivered in readiness for this next major step. The plumbing work had been put in for much of the kitchen and bathroom as well. I was fortunate to be able to view inside the property at this point also and it was really exciting to be able to get a feel for the space that we had been looking at on paper for the last 12 months. Although the plaster work had not been done you could easily walk through the different rooms and experience the layout. Knowing that it was now the Christmas and New Year break I wasn’t expecting much to be occurring for the next few weeks. Check out the pictures below to finally see the skeleton of the property up at last!
Frame’s up, roof is on and the bricks have arrived
View from the rear of the property
Inside looking from the kitchen through to the living room
This is where the kitchen will be. A bench will be directly in front
Doesn’t look relaxing yet but this will be the bathtub!
Looking from the main bedroom, walk in robe on the left and bathroom on the right
View from the living area to the entrance hall
The properties behind were much more advanced as they started from the rear and worked forwards
I’m feeling very excited at this stage being able to see things happening!
Part 3 of the new build left us having signed the contracts in December 2013. Now we just sit back and watch the magic happen…or so we thought. Of course a lot of builders and people in construction take a well deserved break over the Christmas and New Year period and there were also permits still in the process so it was anticipated that work would commence (with demolition of the existing home) towards late February/early March 2014. What wasn’t anticipated was the local city council and the delays associated with obtaining a demolition permit to commence the work, closely followed by other delays in getting things signed off so that work could begin. OK, so these things can take time but as the months went by with no visible progress I did start to get concerned. Fortunately the agent put up with my regular calls to see what was going on and reassured me that things were progressing in order to enable works to commence. I know I’m not the only person to sometimes be a touch cynical about what real estate agents tell you so by the time July of 2014 came around I was ready to start building the place myself. You can imagine my relief when I was informed that demolition was commencing and things were starting to move…hooray! It was a useful lesson for me to learn regarding red-tape and associated paperwork and also that when it’s in a larger development you really don’t have much (if any) influence on the speed of the project happening. In August of 2014 the existing house on the block was demolished and work officially commence on-site September 1st 2014, 9 months after we signed on to the project.
By this stage I had started on my Renovation Rescue which had, in part, stemmed from the fact that the new build was taking so long and I was gagging to have another project on the go. Knowing that it would still take considerable time for the construction to be completed I was happy to have the renovation to go on with. Meanwhile back at the building site, temporary fencing, portable toilets, and a site office were initially set up. Then site preparation work involved the removal of existing vegetation from the site. The first stage of construction works on the project were the ‘civil works’. At this stage, all the services were run into the new complex with a deep service trench dug through the common area and the various services including power, gas, water, and telecoms laid in the service trench. Large amounts of rock were encountered during this process, which required special rock breaking machinery to be used which you can see in the attached photos.
Finally though, progress had started. I picked up my paintbrush and went back to the renovation in the hope that now progress would speed up, it certainly did!
The last update about the new build (Part 2) left us hanging after viewing a few examples of the builders work which looked good except unfortunately the development that we looked at just wasn’t quite right as far as the layout and location went. The great thing about real estate though is that there is always plenty more where that came from and after keeping an eye on various developments throughout the year there was one that sparked our interest in early November 2013. The location looked good and the project layout ticked the boxes, so after contacting the agent (a different one to last time) he offered to show us a completed example of the unit and off we went for a look. Now 10 months is a long time and I don’t have the best memory but it wasn’t until we were inside the property having a look (and after a few minutes of déjà vu) that I realised it was exactly the same one we viewed at the start of the year! I probably should have realised this earlier (as they were using the same builder) but nevertheless it was still good to have a reminder of what the property was like and additionally to see what it looked like after someone had been living in it for almost a year. Interestingly, it was good to view the exterior of the property and reflect on how it compared to the original marketing picture vs. the finished product. You certainly wouldn’t class the front lawn as a bowling green (one of the issues I have with seeded lawn rather than roll-out turf) but following up recently (via Google Streetview) the owner has competely changed the front garden anyhow. Check out the pics below.
Having another look confirmed that we were happy with the quality of the product and speaking to a current owner of a very similar property on our visit also helped. After this we then drove to view the development site. Unlike the one earlier in the year, this was a large stand alone block of land (except for an older house soon to be demolished) and it was bordered by a school on one side and a large block with an old historic blue stone house on the other. It was near a lot of local amenities including shops and public transport as well as it being on a secondary road rather than a main arterial road like the one viewed in January. After a few nights sleeping on it (as I’m prone to do) and looking over the sales brochures many, many times, we decided to do the deal and signed up to purchase lot 2 out of the complex. I’ll explain my reasoning for picking this one over all the others in the next post. Check out the pics below of the building site and a few people enjoying seing another sold sticker on a sales board…we do love those sold stickers!
Stay tuned for the next gripping post which could possibly end up with the riveting title of ‘Sit and wait’…
Barely a day goes by in the media that there isn’t an article published discussing the challenges of the Australian housing market and how much prices have risen over recent years. The long held ‘Great Australian Dream’ of owning your own home is frequently trotted out to tug at the heart strings of TV viewers when trying to find a suitable scapegoat for sky high property prices. Throughout much of 2014, focus was being placed on foreign investors landing on our shores with suitcases full of money and pricing us locals out of the market. Currently the place for blame is on negative gearing. Whilst I’m happy to agree that negative gearing may have had some contribution to price rises, it’s important to take into account the huge amount for factors at play here. Although I’m no economist, it doesn’t take a genius to realise that the combination of negative gearing, foreign investment, historically low interest rates, ease of finance, ongoing agent under-quoting and the sense of urgency portrayed in the media all play a role. Not to mention the fact that almost 70% of Australians choose to live in capital cities and that there is only so much land available in these relatively tiny pockets of our enormous country. Geography and demographics certainly play a role.
Of course I’m biased…but while I do think that negative gearing has an important role to play in supporting investors and in turn the housing market in Australia, I agree with statements made regarding investors only investing in property simply for the tax advantages. To me, purely investing for the benefits of negative gearing is completely the wrong approach (although plenty do it). Following here are two videos worth a watch. The first is a clip from ‘The Project’ on Network 10 which aired last night and fired me up to write about this topic. Pay careful attention to the generalised statements and overall tone of the clip, it’s enough to make you go out and push the nearest property investor under a bus. The second clip by well known Australian property investing wunderkind Nathan Birch is intriguingly entitled Negative Gearing Sucks Balls. Nathan’s explanation about negative gearing and why people get caught out by it is spot on in my view. My thoughts? Negative gearing is a useful bonus for investors but certainly not a reason in itself to invest in property. Check out the clips below and make up your own mind!
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!