<html><body>
Renovating shows have flooded our TV screens leading to a boom in home renovations around the country. However, as we saw on The Block, there is often not a lot of money to be made out of renovating.
Part of the problem is that many people get absorbed with the hype surrounding these shows. The figures back it up.
IBISWorld forecast in August that Australia’s DIY and renovation sector would grow by 15% over the next five years and be worth $25.5 billion by 2016-17. The biggest problem is that renovating is not a game, it is a business and it needs to be run like a business.
The best way to make money out of renovating is if you:
1. Buy the property under market value.
2. Buy the worst house in the best street.
3. Are capable of doing all the renovations yourself – meaning the carpentry, electrical, plumbing, bricklaying, footings and foundations etc etc
4. Concentrate full time on the renovation. Does this sound like you?
The difficulty with making a profit out of renovating a house and selling it is because you are relying on one house to deliver the ultimate price. Consider, for example, you pay $700,000 for a house to renovate. You decide to spend $150,000 on the renovation. By the time you do the work and put the house on the market you have considerable money tied up in the holding costs for the project until you sell. If you sell.
Depending on the property market cycle at the time, the selling price is up in the air – hence this is a speculative investment, which can be very risky. If you cannot turn the project around from purchase to selling within 12 months you will have a serious problem. Or very deep pockets.
Luckily there is an alternative – development and subdivision. When you are developing a property you are proposing to build two or more houses on the one block. What this means is that you are creating multiple houses on the land, hence multiple sales and revenue. If we take, for example, a property we have bought for our same $700,000 and subdivide it into three properties, it is costing us $233,333 for each unit site. The cost of building the three will be more economically viable than just renovating one house because you can spread the costs of the development across the three properties.
With the right project team behind you, and you run the project like a business not a game, it can be very lucrative. Property development and subdivision can also mean proposing an apartment building on your property. Here are a few things you need to know:
Step 1 
Ask yourself, “What is my objective?” That is, are you developing the property to build and hold dwellings to lease, or are you developing the property to build and sell for a profit?
Step 2
You need to consider the purchasing structure in which you intend to buy. The purpose of the development will dictate the type of company structure you will need to set up. It is best to engage a specialist accountant that deals with property development transactions.
Step 3
Clearly understand your financial position and, with the assistance of your accountant, determine your buying power. By knowing how much you can afford to spend you will have a clearer  idea of the property types and locations you can realistically consider.
Step 4
Research the suburbs you are interested in by physically visiting and inspecting the location and what it has to offer. Investigate the demographics of the area and review the dominant buyer and tenant types. Understanding your target market before designing your development is crucial.
Step 5
Walk the streets in and around the pocket you’re considering, taking note of the different types of dwellings on offer. Are there any new townhouse developments? Streets dominated by one style of housing (such as stand-alone houses) can present difficulties in gaining planning approval. The character of an area, and perhaps specific streets in particular, plays a critical role in council decision-making processes.
Step 6
When sourcing a property to develop pay particular attention to title documents. This document will notify you of any restrictions on the property, such as a single-dwelling covenant. The documentation will also assist in identifying the existence of any easements, which can impact the viability or potential design and layout of your development.
Step 7
Once you’ve selected a potential site it is wise to obtain pre-purchase planning advice from a town planner, who will confirm what is legally achievable for the site. Steer clear of obtaining planning advice from the local council, as the advice they provide can be conservative, which may limit the profitability of your development.
It is recommended that you conduct your own independent research concerning the site and similar approved developments at and around the location. This information is freely available by contacting the council.
Peter Bozinoski is director of <a target="_blank" title="ProjectFacilitator" href="https://projectfacilitator.com.au/">ProjectFacilitator.com.au</a> He appears on the Channel 31 show <a href="https://www.c31.org.au/program/view/program/melbourne-property-tv" title="Melbourne Property TV" target="_blank">Melbourne Property TV</a> every Monday night at 8.30pm.
 
 
</body></html>

pbozinoski-Ce6rirn824

Eight steps to add value to your property (and renovating is not one of them)

<html><body>
There are so many different opinions out there regarding the status of the current residential market and where it is heading, how can one make sense of it all? 
Whether you are reading the newspaper, seeing it on television news reports or reading articles by "property experts" on the internet, everyone seems to have an opinion on where the market is heading. 
It is no wonder there is no consumer confidence with so much negativity being reported in the media. What this has certainly done is made investors stop in their tracks, they are fearful in what they read and yes, things are apparently on hold. 
It has become evident from the enquiries received by our company, people are not looking to buy, but more and more are exploring another market, the property development market. Our company is taking calls on a daily basis from people wanting to know how to subdivide their own existing properties.
More than ever before, we are finding people more curious about property development and how they can get involved, maximise and add value to their existing property. Here are seven steps to follow before buying a property to develop.
Step 1
The first question you need to ask yourself is, “What is my intention with this property development project?” Meaning, are you developing the property to build and then hold onto the townhouses for rental return or are you developing the property to build and sell for a profit?
Step 2
You need to consider the purchasing structure in which you intend to buy. Depending on the purpose of the development, this will dictate the type of company structure you will need to set up. Find a specialist accountant that deals with property development transactions.
Step 3
Clearly understand your financial position, and with the assistance of your accountant, be aware of what your buying power is. Knowing how much you can afford to spend will steer you into certain suburbs.
TIP: This is a business transaction, so do not make decisions with your heart.
Step 4
Do your research on the suburbs you are interested in, physically go out and see what the market is doing in the area you are looking at buying, check the demographics of the area, who lives there: singles, families? This information will help you determine what type of townhouse design you will need to create. Really get to understand what your target market is before you design your development.
TIP: Always go with your instinct. If it does not feel right, move on to the next one.
Step 5
Drive through or walk along different streets, pay particular attention to the different types of buildings in the street. Are there any new town house developments that might have been built recently? If you come across a street and all you see is every block has one house on it, steer away from purchasing in this street because you will have a greater fight on your hands to obtain approval.
Character of an area and particularly in a street plays a key role in the council decision-making process trying to work out if your proposal is an acceptable development for that area.
Speak with the council and find out what the rules and regulations are that govern the area and more specifically the property you are looking to buy.
Step 6
When sourcing a property to develop, pay particular attention to the title documents. It is in this document you will find if there are any restrictions on the property, such as a single dwelling covenant. Also, from this document you will identify if the property has any easements. If you don’t clearly check and understand the importance of establishing whether or not easements exist, then this could potentially be one of the reasons why you cannot develop and build what you set out to do.
Step 7
When you come across a site you believe has development potential, obtain some pre-purchase planning advice from a town planning consultant to confirm that what you have set out to do on the property is legally achievable. I would steer away from obtaining planning advice from the council, only because the advice they will provide you with will be very conservative and your property development will not stack up in terms of profitability.
Again, I highly recommend you do your own research and find out the development approvals around the site you are looking to buy. This information can be found by contacting council and also remember to look into the Victorian Civil and Administrative Tribunal’s website to find out what decisions VCAT has made. This is very useful information and you will quickly establish the precedents already set in that area.
Peter Bozinoski is director of <a href="https://projectfacilitator.com.au/" title="ProjectFacilitator" target="_blank">ProjectFacilitator.com.au</a> He will appear on the Channel 31 show <a target="_blank" title="Melbourne Property TV" href="https://www.c31.org.au/program/view/program/melbourne-property-tv">Melbourne Property TV</a> from September 5.
</body></html>

Peter Bozinoski

Editor's Picks

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.

Peter Bozinoski

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

The latest real estate & off the plan properties & news, delivered to your inbox.

Developments

New apartments

New townhouses

News

The latest real estate & off the plan properties & news, delivered to your inbox.