If you’re like many in the BuildHer community, you’re probably asking this common question: How much money do I really need to renovate for profit?
WELCOME TO SEASON 5 | EPISODE 38
How Much Money Do I Really Need to Renovate for Profit?
It’s a great question, but one that doesn’t have a simple answer. The first thing to note is – it depends. The amount of money you need to renovate for a profit depends on a number of things, and in this episode I walk you through four examples of different project scenarios and the financial strategies employed to carry out each one.
First up, I give an overview of the standard way of renovating, which can be fairly labour and cash intensive. Now, often that cash doesn’t come out of savings. The good news is, If you’ve done a couple of projects prior, you may be able to leverage your equity for your new one.
Next, I give you an example of a project where I put in money with a group of seven others. With this, we obtained development finance to execute the build and renovate for profit. I talk about the timeframe of the process and the return on investment to give you an idea of what to expect on a project like this.
Then we move on to a seller joint venture – a scenario with fairly low cash intensity, but on that’s a little harder to land. I use an example where I teamed up with someone who already owned a house ready for renovation, and the process we undertook to increase the value of the property.
Finally, I take you through a project where I injected zero cash, but put in my time and expertise to manage it. While a group of people invested their money in the build, my knowledge equalled my share and I was able to split the return on the sale with the other investors.
As you can see, there are various ways you can renovate for profit – there is no hard and fast rule. Can it be very expensive? Certainly, but don’t let this dishearten you. There are still ways to carry out your dream project, and identifying which strategy will work best for you is your best chance at success. This is your game; it’s up to you how you play it!
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