10 Oct Making 100K out of a reno in 6 weeks – Jane Slack-Smith
Renovation superstar Jane Slack-Smith shares the story of how she added one hundred thousand dollars in value to a property in just 6 weeks.
Kevin: In a recent article in Australian Property Investor magazine, an article called Renovation Gold. It featured some excellent comment from my next guest, Jane Slack-Smith. Jane, of course, is from Your Property Success.
Jane: Hey. How are you doing, Kevin?
Kevin: Yes, good. That was a tremendous article. What a great success, you actually added $100,000 in value in a period of just six weeks.
Jane: Absolutely. Look, when I look at doing any renovation I need to add at least $2 for every $1 I spend. In the end we ended up adding about $2.90, so tick the boxes.
Kevin: Were there any great lessons out of that?
Jane: I think the thing is that most people when they think about renovation, they think they’re buying a property to renovate. I actually bought this property back in 2002. I didn’t renovate it until 13 years later. I think that’s one of the lessons from this.
I have five R’s of renovation. You have a refresh renovation where you run in and clean it up. You have a repair where you pull out the toolbox and you might do a little bit of painting. Then, you have that rejuvenation, which is we get rid of the kitchen and bathroom and make it look beautiful. The fourth one is restructure, where we’re adding on that unique box on the back that we talk about or maybe converting a three-bedroom to a four-bedroom under the current roofline.
But this is the revamp. This revamp is about looking at your current portfolio and going, “You know what can I do for it,” so I did that.
Kevin: Wow. It just shows you, doesn’t it, that it’s never too late to renovate.
Jane: That’s a good title for a song.
Kevin: Yes. Actually, it probably is. But it is never too late, is it?
Jane: No, absolutely not. I think we’ve had all of these changes with APRA and ASIC and people’s borrowing capacity. People need to be a bit inventive about their current portfolio and (a) making sure that it still performs for them and (b) looking at opportunities to make it really deliver on the promise that it can really be.
Kevin: Someone starting out with renovation, Jane, what would be your advice? You’ve given us the refresh, repair, rejuvenate, restructure, and revamp; does one of those suit the first-time renovator better than any other? I would imagine it would probably be refresh, if you buy well enough.
Jane: Yes. If you buy well, if the property is a really… We’ve all inspected these properties. You walk in and they smell and they might have years of smoking and you can see all of the marks on the roof. But, in actual fact, a bit of elbow grease, and they’re actually a fabulous property and you can increase the rent. Now, unfortunately, they’re a little harder to find.
But that rejuvenation renovation is really what most people do, that cosmetic renovation. I think when we look at renovation as a key to making a profit, we really need to understand that (a) does the property have the capacity to be renovated? So obviously, we’re not looking at brand new properties. But (b) can we actually make money out of it?
The reason that I targeted this property was that I could see that median properties in the area or actually renovated properties were selling for $900,000 to $920,000. I knew when I got my first valuation done that it was valued at $820,000. The renovation was going to cost me less than $40,000 with holding costs, etc. So I could actually create a better and higher value for that property.
You obviously don’t want to spend $40,000 and have your $820,000 property only worth $860,000. This property went up and six weeks later was valued by the same valuer at $920,000, and that was what I was aiming for: creating that equity and pushing the rent up.
Kevin: Yes. Rejuvenation is where you say most people go to. Well, that’s certainly the first thing they think about when you talk about renovation. But it can also be the area, if you’re not careful, where you can very easily overspend or overcapitalize.
Jane: Absolutely. I pulled out my renovation discount card and managed to get some really great discounts on my kitchen packages, etc. But I think the thing is that you really have to be clear about your budget.
For every 10 properties I look at that are in my budget that I want to purchase, I always look at one property that’s been renovated. I look at the standard of finishes that I have to do. There’s no point putting Caesarstone in an area that doesn’t expect Caesarstone in the kitchen, and that’s really one area that you could really overcapitalize.
Kevin: So much to learn about in renovation. Now, I want to mention here that The Ultimate Guide to Renovation is about to kick off again.
Jane: Absolutely. We’re in preparation to opening enrollments. Enrollments are going to open on the 20th of October, so that’s pretty exciting. But, we’re getting geared up for all our new students.
Kevin: Okay. Well, if you’d like to know a little bit about it, there’s a video series that you can jump into. It’s absolutely free of charge. All you have to do is use the link on the home page or on any one of player pages at RealEstateTalk.com.au. That’ll take you straight to it. That’s right, isn’t it, Jane?
Jane: Absolutely. We look forward to educating people. The video series is excellent. I had a lot of fun filming with drones this time, so it’s a little bit different.
Kevin: That’s good. Well, I’ve always enjoyed them in the past, and I’ll look forward to seeing these, too. There’ll be three in the series and I’ll start streaming it. Just go to the Real Estate Talk website (RealEstateTalk.com.au), and have a look for the link, the Ultimate Guide to Renovation. Click on that. That will give you all the details. It’s absolutely free, and you can start to learn all about renovation from the lady herself, Jane Slack-Smith.
Jane, thank you so much for your time.
Jane: Thank you, Kevin.