Cherie Barber's eight step renovation process

Cherie Barber's eight step renovation process
Cherie Barber's eight step renovation process

Renovating is not always approached as a scientific process, however succesful renovator and director of Renovating for Profit, Cherie Barber, recently revealed that her success rides on a specific approach.

At the recent Property Millionaires Tour at the Sofitel in Melbourne on Saturday, Barber said that her process wouldn't win her any design awards but it's about making money and ensuring the renovation undertaken is appropriate to the area.

She shared a brief run-through of her process in her presentation at the event, during which Property Observer was present.

1) Structure and strategy

- The structure in which you purchase is crucial to ensuring you are taxed efficiently at the very end of the process. Should you purchase in a trust, SMSF or company structure?

- Decide on the strategy upfront: Is it buy/renovate/hold, buy/renovate/sell or something else?

2) Suburb due diligence

- Investors must know suburbs down to a street level. Pointing to her target suburb of Balmain, she explained that she knows where the negative and positive price pockets are, or where the prices change, and the reasons for this.

- Ensure you're targeting the right type of suburb for the renovation you intend to undertake. Middle ring and outer areas tend to suit cosmetic renovaitons, while inner city areas tend to favour structural.

3) Pricing due diligence

- The real estate agent's job is to make the vendor money, never forget this. 

- Ensure you are looking at true comparables - your suburb due diligence should assist you with this process.

4) Property due diligence

- Ensure you're not purchasing a property with major defects you cannot rectify under your budget (think about the hidden problems, such as termite damage or bad wiring).

- Check that the property stacks up for the majority of buyers in the area. Your demographic is crucial, and you should be thinking about a property as a product.

- Calling council and a number of other local experts will save you money in the long run.

5) Acquire

- The purchasing process and negotiation can be crucial for getting the price right. Ensure you enter in unemotionally and knowing the value (pricing due diligence).

- There are a number of different conditions, requests for early access and similar that can be asked for at this part in the process.

6) Council approval (usually for structural renovations)

- The earlier this part of the process is started the better. Investors should be prepared for councils to take longer than is often stated on their websites.

- To get an idea of how long the process might take, check online and see what has already been approved and the time frames. Expect it to take longer.

7) Renovate

- Get some good tradespeople and treat them well. It can often take a number of renovations to get your team selected.

- Keep organised, keep timelines and ensure effective communication.- Avoid being the DIYer unless you have done it before effectively.

8) Sell/Rent

- While you should have been clear on which of these approaches you were going to take since step one, it's now important to ensure you approach the best real estate agents and property managers for the job.

- Treat choosing agents as an interview process, rather than solely basing it on personality.

- Ensure that at any opens, the changes you have made to that process are highly visible and communicated to potential tenants/purchasers.

On September 5, 2013 we asked readers which room they thought would generate most value when renovated. The results are below:

poll-results-sept-9

Jennifer Duke

Jennifer Duke

Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.

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