Renovate for Profit with These 8 Steps

Renovating a fixer-upper and renovating it for a nice profit… that’s the dream, right? While a renovation project can be a great way to make money, it’s not a get-rich-quick sell strategy. After all, each project is unique and has its considerations.

And if you’re thinking about giving renovating for profit a try, you need to know a few things before you start. Here’s an eight-step plan for how to renovate for profit.

Step 1: Assess and Buy the Right Property That Can Generate an ROI
Step 2: Determine Scope of Works to Maximise Our Value Proposition
Step 3: Complete the Design and Documentation
Step 4: Create a Strategy for Manpower
Step 5: Understand the Correct Contracts
Step 6: Manage the Work Until Completion
Step 7: Style the Property for Sale
Step 8: Create and Manage the Sales and Marketing Strategy

Step 1: Assess and Buy the Right Property That Can Generate an ROI

There are a lot of properties out there— how do you know which ones are worth investing in? Well, it’s all about doing your research and then making an informed decision. Here are a few things you need to consider when assessing a property:

  • Location. The closer it is to the city, the pricier it will be, but it’s also likely to increase in value more quickly. Look for a property that strikes a balance between price and location.
  • Size. A bigger property will usually be more expensive, but it will also have more space for tenants or guests. If you’re looking for an investment property, choose one that’s the right size for your needs.
  • Age. Newer properties tend to be more expensive than older ones. But they may also require less maintenance. So when you look for an investment property, balance its age with its price and condition.
  • Condition. Assess the state of the property before making an offer. Considering how much work it requires to bring it up to your standards is noteworthy.
  • Tax implications. Note that investment properties are subject to capital gains tax when sold.
  • Real value. Aside from capital gains tax, investment properties are also subject to land taxes and local rates. The rates can vary depending on the municipality of the property. And so, do your research and understand the cost of these before making an offer on a particular property.
  • Current property value. Keep in mind that the current value of a property may not be indicative of its future value.

Step 2: Determine Scope of Works to Maximise Our Value Proposition

We’ve all heard the horror stories of a renovation that goes way over budget. And you can assume that it will not end well for your financial and emotional status. 

Determining the scope of work is one of the most important areas to focus on. At this point, you will need to work out where the sweet spot will be where you are maximising your project’s value whilst being clear about your budget to achieve the biggest Return on Investment (ROI) possible. 

Given that, below are some tips on how to avoid over capitalising on your renovation.

Emotional ConsiderationsFinancial Considerations
Don’t fall in love with your new property. Getting attached to a property you’ve just renovated is easy. But remember that it’s still just a property. If you spend too much money on the renovation, you may be unable to recoup your investment when it comes time to sell.Don’t just focus on profit. Many people think of renovating for profit, but this is often easier said than done. Focus on creating real value for your home rather than trying to make a quick buck.Don’t forget about your lifestyle. A renovation should improve your quality of life, not make it more difficult. Consider your needs and wants carefully before making any changes.Don’t put all your money into one new property. This may not be possible when you are starting out, but as you progress, diversify your investments, and that includes your home renovation.Make sure you have enough money. Don’t put yourself in a position where you’re borrowing more money than you can afford to pay back. That way, even if the renovation doesn’t turn out exactly as planned, you won’t have a huge financial burden.Keep your eye on the future. Don’t spend too much money on renovations that won’t increase the resale value of your home. Stick to improvements that will add value and appeal to potential buyers.Don’t over-improve your neighbourhood. Just because you spend a lot of money on a high-end kitchen doesn’t mean it will add that much value to your home. Carefully consider the uplift that each improvement you make will return. Don’t go overboard with the budget. Stick to your budget when renovating. Or otherwise, you could end up spending more than you can afford.

Still not sure if it’s going to be a profitable venture? Use our Free Project Profit Calculator to calculate the estimated profits you’ll get from your renovation!

Step 3: Complete the Design and Documentation

The design phase of your renovation is where you’ll finalise all your project details. And it’s time to decide on things like fittings, fixtures, and layout. It’s also when you’ll develop a budget and schedule for your renovation.

The level of documentation required will depend on the level of input you will have during the project and the scale of your project. If you are just replacing fixtures and finishes and updating the home internally, then you may not need detailed documentation. 

However, if you are extending and renovating – or have specific outcomes, then you will need to have plans of your design (and permits issued) you will need to understand how much documentation is required for the level of project you wish to undertake and then complete yourself or hire a design professional to help you complete this work. 

Step 4: Create a Strategy for Manpower

Think about the different aspects of your renovation that will require manpower. Do you need someone to help with the demolition? How about framing?

If you’re adding any new electrical or plumbing, you’ll need a professional to help. And, of course, there’s always the painting, plastering and finishing work that you may or may not be able to complete yourself. 

Don’t take shortcuts in the final phases of a project. If you can not complete the work professionally, then maybe you should consider hiring a professional, as it can cost you a lot when trying to sell. 

You will need to know your strategy for completing the job to factor in the cost of hiring a contractor. 

Here are some options you might want to consider:

  • Owner Builder / Experienced renovator. This is where you will do a large amount of the work and co-ordination yourself.  Probably most suited to someone who has completed numerous renovations, knows all the process’s ins and outs, or has some trade experience. 
  • Hiring trades. A good option if you want to save money in the management from the builder, but you still need to understand the process well and be able to co-ordinate and defect the works.
  • Blended BuildHer. This is where you will work alongside the builder/lead hand to manage and build the project, this is a collaborative process. 
  • Tendering to a builder. This is the least hands-on. You have the project completely documented with a detailed scope of work, send it to one or a few builders to quote and hire them to complete the work. 

Step 5: Understand the Correct Contracts

When you’re renovating to sell, or flipping a house, there are a lot of different moving parts. You’ve got builders, electricians, plumbers, painters, and more all working together – which is great when everything is running smoothly and as expected.  While most of the trades and builders you use will be professionals, something can and will go wrong. And this is the point where you will need to rely on a contact. 

Depending on how you plan to run the build, you will need to get the correct contracts in place with your trades and/or builder. When you are selling a home, you will need to ensure you have all the correct paperwork and permits, as it’s part of the contract of sale. 

Step 6: Manage the Work Until Completion

It is always the final 5% that takes the longest, and whilst the initial 90% of the build can be a heap of fun, this bit will often drag on! But – the only way to actually make a profit from your build is to manage the work ALL the way to completion. 

Here are a few top tips for getting it all done: 

  1. Make a list of all the outstanding tasks. Include things like painting, tiling, and installing light fixtures.
  2. Create a schedule for completing these tasks. Ensure that everyone involved in the project knows about it. Doing so will help avoid any last-minute rushing around or unfinished work.
  3. Stay on top of the budget. It’s easy to go over budget when you’re getting to the end of a project. So, make sure that you keep a close eye on your spending.
  4. Keep the communication channels open with your builders and tradespeople. This will help ensure that everyone is on the same page and that there are no misunderstandings.
  5. Be prepared for unexpected problems or delays. Things rarely go according to plan, so it’s important to be flexible and adaptable. Build a little bit of slack into your timelines!

Step 7: Style the Property for Sale

Now it’s time to get busy making your home look its best so you can get top-dollar prospective buyers. Some tips on styling your house for sale include:

  • Make it feel as homely and inviting as you can, you are selling the dream of living in this home, and that means curating furniture and making sure everything is as amazing as possible. 
  • Don’t forget the little touches, like greenery and flowers. First impressions count, and you want to make the best impression with the home you have spent countless hours renovating. 
  • If you don’t know how to do this properly and create that designer look (most people can’t), don’t worry! Hire expert property stylists to come in and help as they know exactly what to do and will ensure your home is shown in its best light. 

Step 8: Create and Manage the Sales and Marketing Strategy

Below are some tips on creating an effective sales strategy for your renovated property.

  1. Understand your target market. Who is most likely to be interested in your property? Consider location, age, family size, income, and lifestyle. Is your home set up perfectly for them? Can you do anything else? 
  2. Research the competition. Look at similar properties on the market and see what they offer. What can you do to make your property stand out? How are they selling – are there many buyers in the market? 
  3. Set a realistic price. Once you’ve researched the competition, you’ll know what similar properties are selling for. Make sure to price your property accordingly so that it’s competitive but also turns a profit.
  4. Hire a great listing agent! Hiring the right agent to sell your home is imperative. Make sure you can trust them and that you have a good level of communication. 
  5. Method of Sale Work with your listing agent to choose the best method of sale for your property. The way you sell your home; auction, expression of interest, best and final offer or listed purchase price can have a huge implication on your outcome. Know which one will be best for you and why. 
  6. Create an attractive listing and market your property online. Your listing is potential customers’ first impression of your property. So, ensure it’s polished and professional and has the right photos to show its potential online. Utilise social media, online directories, and other digital channels to reach people.
  7. Stay flexible with showings and offers. Be prepared to accommodate potential buyers’ schedules regarding showings or inspections. Close the deal. Once you’ve agreed with the buyer, it’s time to finalise all the paperwork and hand over the keys.

By following these eight steps, you can create profit from your renovated property. Each step is nuanced and varied! We want you to understand that there is no one size fits all formula, but there is a process to working out how you do this and maximise profit! 

If you want to learn more about how we help women in this market maximise their profits and create a lifestyle by renovating or building for profit – then please book a free consult. We can talk about where you are at now and how to maximise your future investments!

And with a little hard work and expert help, you can be the “BuildHer” of your success.

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