Renovating For Profit: Investors Guide - Part 2
Investors guide to renovating part 2: The smart investorTeamwork, professions, and planningTeam work with key people is essential to understand property investing. Planning and being aware of your options when buying a property are all part of the key to success for the property investor. Networking with property professionalsThe most successful property investors enlist the help of key professionals to help them plan and complete their investing strategy.The Financier: the person who organisers your investment loans. They could be bank a manager, loan broker etc.Accountant: Your accountant is one of the most important people on your team. Make sure they understand property investment or better still have property investments. Your accountant is essential for minimising your tax and maximising your profit.Solicitor: You need one that does the work efficiently and accurately, if you find a good one stay with them because some of them are inefficient not worth their fees.Real estate agent: these will vary depending on your location. However if you build relationships with the real estate agents in the main geographical area you are looking to invest in your opportunities can increase rapidly.Building ContactsLocal Council building contact: Know the local council building authority contact for questions and building approvals.Architects and building designers: Architects can show you how to maximise the space you have and can be useful in getting the most out of the property.Trades people: Plumbers, electricians, painters, plasters, etc. When you find good reliable trade people use them on every job and form a good working relationship with them. Settlement Time: Making the most of itWhen you have found the right property you want it to start paying you as soon as possible. The best way to do this is to request a longer settlement time with access to the property. If you can negotiate a longer settlement time with permission to start renovations, you can possible have the property ready to make money by settlement time. Also you only start to pay your mortgage from the day of settlement. This means that if your strategy is to renovation and then rent the property out, you can have the property ready to rent out or already rented by the time of settlement. If you intend to sell the property as soon as it is renovated then a long settlement can mean you can have all the renovations done by settlement and can even sell it before. This means you will not incur mortgage costs at all.Your solicitor can negotiate a long settlement and have a special condition added to the contract giving you access to the property before settlement.So how do you do it? Have you solicitor submit three offers with three different settlement periods.Property settlement example:
- $330,000 for a 30 day settlement
- $345,000 for a 60 day settlement
- $360,000 for a 90 day settlement
All of these offers would have a special condition to have access to the property.If people are still living in the property offer an extra cash settlement for them to move out early or offer to pay their removal costs or pay for them to rent another house. As long as your offer is below the mortgage costs you gain time and have the property ready at settlement. You will need to be creative so do what it takes to get into the property so you can start the renovation.Planning and budgetingThis is the most important point of all. You must know your budget and stick to it with a 10-15 per cent extra for the unknown. You will need a list with all your items listed on it from light fittings to landscaping and as you complete your renovation update your list.Planning does go hand in hand with your budget. Plan the time it will take you to do the renovation making sure you have a 10-15 per cent margin for delays and mistakes. Know when a particular trade is needed and get quotes and book them in as soon as possible. You must know the right order in which to do the work. For example do not put down new carpet and then paint the house out. Plan with dates in mind as the better your planning the smoother the renovation will go. Also if you have planned correctly you will stay within your budget.