Successfully renovating, an exclusive interview with Jane Slack-Smith

When it comes to renovating and doing so to make a profit, it's not just about taste and making the property look good. It's also about strategy and how you handle the final stages to ensure the valuation stacks up.

Investors Choice Mortgages director, and author of Your Property Success With Renovation, Jane Slack-Smith came into the Property Observer offices to provide our readers with her exclusive tips around these two areas of renovating.

You can see her thoughts in the video below.

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Transcript:

When I'm looking for a property to renovate and doing a walk-through and an initial assessment there's a couple of things I look for because I really want to use the minimum amount of money to add the maximum perceived value. I think that's the secret to renovation. What I'm going to look for are twists that I can make. So maybe add an extra bedroom in the current floorplan without doing a structural renovation and within an area where I don't need to go to council to actually have that approved. I love it when I walk into a property and I hear people as they're walking out going 'Oh my gosh that's terrible, did you see that? Oh the smell or that colour'. There are a lot of things that scare people off and they don't actually have the imagination to think a bit of elbow grease or a little bit of paint can actually fix this up.

So I'm looking for those properties that the market has actually written off as well. I think there's also a lot of opportunity when you're looking at cosmetic renovations to actually just look beyond the grime, look beyond the floorplan and look at the actual structure. The importance to me is making every single dollar count in the eye of the valuer, because the valuer is the person who's going to come through and validate what the end value of the property is, which is going to allow me to pull out equity. So if I have to put money into fixing up the gutters, or fixing up pest and building issues then that money isn't going to be seen. So that's what I'm really looking for - problems. I've done most of my research before I even hit the property, so I'm just validating that there's no unseen, or unsightly, or big problems that I could be missing out on.

It's really important, if you've done all the preparation in finding the suburb, the property and then putting your blood, sweat and tears into renovating the property, that you don't just stop there. It's really important that you then continue in the process and release the equity or have the valuer value the property at what you want it to be valued at. So it's really important that you don't just relinquish the responsibility of the assessment of the valuation to the valuer. As a mortgage broker I know that there's a lot of systemisation in the banks these days with valuation, so a lot of valuations are done as kerb-side valuations, which essentially means the valuer doesn't walk through.

It's really important that if you've done a renovation that the valuer walks through because all they have to assess what the property is worth is what you bought the property at and what the comparable sales have been recently. So you really need to work with your mortgage broker and maybe you have to indicate that the loan to value ratio is higher to actually put it into the system to actually allow it to have a full valuation, but you need to have them walking through there. I always make sure that I'm the contact for the valuer, not the real estate agent, not the tenant, because I want to speak to the valuer even if I'm not there on in that state, and I want to coordinate that meeting and give them some extra information.

Honestly, if you employ your valuer yourself in the beginning you're probably looking at them walking through and validating their own research and spending 12 minutes in the property. If it's a bank valuation it's probably more like seven minutes. So you need to make sure that everything just looks right. All they're doing as a valuer is confirming their thoughts on what that property is worth. Most valuers work within two or three suburbs, they've seen so many properties within that area they've done the research before they turn up.

I also have a template that I give to my students that they fill in which pretty much summarizes all the information about that property, the improvements that have been made. I usually a rental assessment by a number of real estate agents, grab a magazine and go to the databank at the back which will tell you what the rental yield is so you can estimate what the value of the property is, and I also give them some comparables. So I physically go out there with my tape measure and measure the front measurement of the property and the side measurement and give them some indications of what a property's measurements are. Are they superior or inferior and give some commentary around recent sales as well.

Valuers often only have the sales that are available to them through RP Data or real estate agents. They're not always up to date with the most recent sales and in a rising market you don't want them to use three month old data, so if you do know of recent sales in the area make sure you do let the valuer know. Let them know the price, the settlement date, the real estate agent and make it easier for them - give them the real estate agents phone number so they can ring them and actually validate that sale because you've done so much work and there's no point in you dropping the ball at the end because this is really what you're doing everything for.

Is there anything in particular you would like to see a video on? Suggestions are always welcome at jduke@propertyobserver.com.au