Like me, I bet you hear stories all the time about how people have lost money on their renovation – they spent too much, they took too long, the property didn’t re-value up or sell for what they had anticipated… or all of the above.
In addition to the negative stories out there, there are plenty of happy endings. I’m sure you’ve read about these in magazines and seen examples at seminars etc… But what’s the difference between a renovation success story and a renovation nightmare?
What do the successful renovators do that the others don’t?
The answer is that successful renovators know the 7 Deadly Renovating Sins. And they know how to avoid them.
Deadly Sin 1
Not knowing that if you know your target market, you can make your property invaluable to them and create enormous demand (= more $$!)
A smart renovator will identify their probable target market and renovate their property according. This is true whether you are selling or renting your property out.
If you don’t know who your target market is, talk to local real estate agents or property managers to find out. Also consider what facilities are nearby to your property so you can ascertain the types of people who might buy or rent there. Are there day care centres nearby, high schools, churches, public transport or shops?
Your target market might be first home buyers with small families, professional couples (DINKys – Double Income No Kids), retirees, students or large families with teenage children. Often it’s hard to define who your target market is going to be, but it is worth the effort – even if you need to cater to more that one of these groups.
Next thing we want to work out is – what do these people want? How do they live? What sort of home are they looking for? Think of how your target market lives day to day and do your best to cater to those needs.
If you are simply re-valuing, then this concept is not particularly likely to increase the valuation.
However, if you are selling or renting your property out, then getting your renovation right for your prospective buyer or renter, will result in hot demand and a faster, easier and more profitable transaction.
Deadly Sin 2
Copying the ideas, colours and concepts from other people’s renovations, thinking it’s the right thing to do on your property too
This is a classic mistake! You’ve seen the shows on TV and thought –“mmm that looks great; I’m going to do that to my property”. Or you’ve seen a friend’s house and you’ve asked for the paint colours and got their advice on what to do on your property. Or you’ve been to a seminar or read a magazine article to gather inspiration – and found a few interesting ideas and concepts to use.
Am I right?
Unless you’re a trained designer, then I’m 99% sure that this is how you’ve got your ideas together for your own renovation.
However, this is NOT the best way to plan your renovation. Your property is no doubt different to the one you’re planning to copy – a different style probably, a different location, a different budget, a different target market.
A different set of rules from what will make your renovation a success.
My point here is that you need to look at your property in its own right. Copying other people’s renovation ideas can lead to disaster if you’re not careful. For instance:
- Using the wrong colours on your property. Even if a particular colour looked great in a magazine or on a friend’s property, it may not be suitable for yours. Be careful not to waste all that money on paint and materials in colours that are simply not right for the job.
- Renovating parts of the property that will not add value to YOUR property (even if it added value to the one you’re comparing to). This is the easiest way to over-capitalise – spending money where there is simply no return.
- Making renovating and design choices that don’t suit your property – and therefore spoil and devalue it. I see this a lot – where people suddenly become ‘master designer extraordinaire’ (sorry, excuse the sarcasm!) and add design features that simply make the property look worse, not better. Instead of asking for help, they waste their time and money on ugly, unsuitable features that offer a negative return.
Deadly Sin 3
Not spending the TIME on planning your renovation.
Unless you have a clear plan to follow for your renovation, you will over-spend and you will take longer than if you did have a plan. Simple as that.
Time-poor people often fall in to this trap. Struggling to do their day job and then trying to plan and co-ordinate their renovation often spells mistakes and ultimately loss of profits.
You’ve no doubt heard the expression “if you fail to plan then you plan to fail”. And this is true for renovations as well.
Without an item-by-item list of what you are going to do to your property, how can you expect to:
- Create a great looking property that is cohesive in design?
- Get accurate pricing before you start?
- Thoroughly plan the implementation?
- Monitor your renovation progress and keep your trades-people on task?
- Enjoy a smooth flowing renovation
When you have a clear plan in place there is no confusion, no fluffing around and no arguments about what you need to do to your property for the greatest financial return.
In particular, spend as much time as you can on:
- Working out exactly what you will do to you property to improve it most effectively (see Deadly Sin 2)
- Getting pricing on the things you decide to do to your property (that will add the most value within your given budget) (see Deadly Sin 4)
Deadly Sin 4
Not working out your renovation budget BEFORE you start
Mostly, people decide what improvements they want to make to their property and then get quotes on those things.
However, you must do this the other way around. Work out your budget first and THEN figure out how you are going to improve your property within that dollar value.
There are a number of schools of thought about how much to budget, but I like to work on approximately 7-8%.
So, if your property is valued at $500,000 you should aim to invest $35,000 – $40,000.
If your property is valued at $300,000 you should aim to invest $21,000 – $24,000.
Of course, these numbers are not set in stone.
For instance, I would increase that amount if the property is in a good growth area. And I would decrease that amount if the property is not in such a good area. And if you’re planning on a structural renovation then this value would need to increase significantly.
You can also decrease that amount if you are experienced. And increase that amount if you are inexperienced to allow for overspending and errors.
The bottom line is you need to know your numbers before you start renovating – then fit your renovation specifications within that budget.
I never ever advise a client or start a renovation of my own before knowing what the budget is – and I suggest you make this a rule too.
Deadly Sin 5
Not knowing what things cost.
This is the number one way to over-spend on your renovation. How can you work out which things to do within your budget if you don’t know what things cost?
If you under-estimate the cost of your renovation based on the list of ideas you’ve come up with, then disaster will strike. You will spend more money than you anticipated on your renovation and end up making no money.
Or, if you over-estimate the cost of your renovation, then you kill the feasibility of the project before you even begin.
Be extra careful when calculating your expected costs and spend a good portion of time on getting accurate pricing from suppliers and trade-people. Then prioritise doing those things that are going to make the biggest difference to your property within your pre-set budget.
Deadly Sin 6
Taking too long to renovate your property (and wasting money on unnecessary extra mortgage repayments).
Let’s face it, you would rather have your renovation completed much sooner than much later. No one wants a renovation to chew up more of their spare time than necessary.
Not only will a renovation time ‘over-run’ take up more of your personal time, it will eat up a fair chunk of your profit in unnecessary holding costs (unless you are living in the property yourself).
Having a clear action plan is essential for completing your renovation on time:
- Know exactly what you are doing to your property and can plan in advance accordingly
- Get accurate pricing from trades-people and product suppliers up front so you know your renovation will come in on budget
- Pre-order materials and products so they are ready when you are
- Buy everything at once to get considerable discounts
- Start work on the project without a hitch
- Minimise the amount of one-on-one communication necessary with each trades-person. With a clear renovation plan written down, everyone will be working to the same ‘script’ and therefore minimise gaps and over-laps which will cost you mistakes and loss of profits. Print your Renovation Action Plan and leave it on site for all trades-people to refer to
- Experience a stress free renovation that finishes on time
Deadly Sin 7
Thinking it’s better to save money than get expert help about what to do to your property.
Being a DIY nation and with so many renovation shows on TV these days, you may think that you have all the necessary skills to make your renovation a success.
If you could spend $1,000 – $2,000 in return for adding ten or twenty TIMES that to your property over and above the amount you achieve on your own – would you do it?
I often see people who will scrimp on the cost of a Hotspace Renovation Action Plan © or a “Borrow My Brain” session with me, but then go on to waste money on a half baked renovation (doing the wrong things, creating an amateur looking property, spending too much money etc.). In the end, they make much less money from their renovation than what would have been possible – just because they thought they could do it better without outside help.
Will that be you? Are you willing to believe our previous clients (see the testimonials page on my website here) and minimise the headaches, frustration and risk a renovation can present?
For 3 free eBooks and 7 renovating eLessons delivered to you weekly by email, go to my website and register – http://www.hotspaceconsultants.com/home