Expert renovator and Tv personality Cherie Barber wants Australians to be aggressive when it comes to home renovations.
“Not smash someone up aggressive,” she clarified jokingly at a workshop in Sydney. Instead, Cherie wants us to rely less on passive investment and get our hands dirty flipping homes for profit.
“You can make a lot of money from buying and renovating ugly houses,” says Cherie. “It doesn’t have to win design awards. It just has to be better than before.”
Overspending is just one of the things that can eat into your profit, putting all those late nights and weekends of hard work to waste, so it’s important to work out your budget accordingly before you even think of picking up that paint brush.
So grab a pen and some paper and start taking notes, because the founder of Renovating for Profit shares exactly how to budget for a renovation project and maximise your return on investment.
Spend wisely
Don’t spend any more than 10% of the current property value on an entire cosmetic renovation. This includes all labour, fixtures, materials and fittings – everything. One of my graduates bought a property in December 2016 for $490,000 and spent $33,000 on renovations. Every dollar was carefully thought out and the property sold for $647,000. That’s over $120.000 in profit. Sticking to the 10% rule allowed room for this profit.
Break it down
First, break down your budget room-by-room and then job-by-job. This makes it more manageable and you’ll be less likely to overspend this way. I’ve personally renovated 100+ properties over more than 25 years and break down my budget this way every time.
Want to renovate your kitchen but aren’t sure how much it will cost? Cherie Barber breaks down a low-cost, mid-range and luxury kitchen reno >
(Photo: Jody D’Arcy) (Credit: Photo: Jody D’Arcy)Remember the 20% rule
Assuming you’re doing a full renovation of your bathroom and kitchen, a good rule of thumb is to allow around 20% of the total renovation budget for each. So, for a $500,000 home you should spend no more than $10,000 on each. When creating these plans and strategies don’t forget, cheap doesn’t necessarily mean poor quality. It just shows you’re clever about finding the very best deal at every single step of the renovations. All these modest savings add up, and we would all rather a little bit of extra money in our pockets.
Have a contingency plan
Always factor in a budget contingency of 5 to 10% for any unforeseen costs. Planning is essential with profit in mind. A clear and realistic outlook on the project you are committing to, pre-renovation, will help you cope better during the process of the renovation.
Reap what you sow
At a bare minimum, you want to get a $2 return on every dollar you spend. Paint will give you a $5 to $10 return on investment, which is why I call it liquid gold! Labour is one of the biggest costs in any renovation so anything you can safely DIY, such as painting, is going to be a big money saver. Here are some of the most cost-effective renovations you can make…
THE POWER OF PAINT
Whenever I’m asked about surefire ways to add value to a property, top of the list is always paint, which is by far the most easy and ever-reliable bang for your buck.
It simply never fails to deliver an amazing transformation for little outlay, and there’s always the option to save on labour costs by doing it yourself. But be meticulous – a sloppy paint job is as bad as not doing it at all.
Looking for a quick, easy and affordable way to transform your dated brick home exterior? Painted brick is one of the hottest home exterior trends right now, favoured for its cost-effective and totally transformative results.
(Photo: Maree Homer) (Credit: Photo: Maree Homer)FIRST IMPRESSIONS COUNT
When it comes to selling your house, first impressions are everything. Buyers are notoriously harsh judges and are often spoilt for choice. That’s why street appeal is so critical, and a quick exterior renovation can add considerable value to your home.
Affordable updates
Rather than ripping out kitchens and bathrooms and starting fresh, Cherie is a big believer in working with what you’ve got. Affordable updates like a fresh coat of paint, new tapware, bench tops or vanities can make a big difference in these spaces and can save you a fortune.
If you don’t have the budget for a full bathroom renovation, cosmetic updates, like new tapware or a stylish mirror, can make a huge difference.
(Photo: Jody D’Arcy) (Credit: Photo: Jody D’Arcy)Budget flooring ideas
Fresh flooring will work wonders for a home and with so many affordable options on the market it really is a no-brainer when renovating. If you’re not lucky enough to find floorboards under the carpet you rip up, opt for a timber laminate flooring to save money and still get the desired finish.
