“Buy low, sell high”.
It’s the mantra for anyone dealing in stocks and shares, and it’s no different in the property market.
I’ve always argued that you can make money from real estate in any market, whether it’s booming or in the doldrums, but the key is getting that property for the right price.
Pay too much, and you’ll be struggling to claw back that money, no matter how cleverly you renovate.
That’s why I place so much importance in my workshops on the need for intensive due diligence when you’re looking for a property that will make you money.
It doesn’t matter whether your strategy is to renovate and rent the property, or do it up to sell.
Starting point has to be locating the right suburb to buy in.
Finding a property that ticks all the right boxes, and then snare it for an appropriate price.
That’s a lot of ducks to line up, but the science of buying smartly is what separates the amateurs from the pros. In a market that is shifting quickly – like we’re seeing in some of the boom suburbs in Australia right now – you need to be even more vigilant so you don’t make a very expensive mistake.
There are two key areas I focus on as part of my 3-day workshop: suburb due diligence and property due diligence. Get these two right and you’re well on your path to wealth creation.
Buy in the right suburb
Even in a hot market, there are suburbs with a good selection of properties that make astute buying. You’ve just got to find them before everyone else does. They’re often “stepsister” suburbs. That is, suburbs that is close to the popular lifestyle suburbs in hot demand, but is still flying under the radar.
Alexandria, in Sydney, is a prime example. A decade or so ago, it was the poor cousin to nearby Newtown, which was already a property hot spot. Alexandria was still in transition from an industrial suburb to a desirable inner-city neighbourhood. Now it’s a hip and happening suburb in high demand. Those who bought back then would be smiling now.
To make a good profit from renovating, you need to locate suburbs that have a decent price disparity between renovated and unrenovated properties – i.e., the property prices show buyers are willing to pay a premium for the renovated version of the same property. If not, move onto the next suburb.
If you’re buying to rent, then you need to factor rental yields into your suburb analysis.
I always recommend becoming an expert on up to three areas, so you’re as knowledgeable as the local real estate agents on property prices, infrastructure and potential for capital growth. That way, you’ll instantly recognise the good buys when they come along, and can move decisively.
Buy the right property for renovating
If there’s little potential to add value to a property then there’s little chance of a profit. So you need an understanding of what works in what suburbs.
For example, if semis are the dominant housing type in your targeted suburb, then you need to know what style of renovated semi is popular, especially if you’re considering a structural reno. That also means you need to be across the suburb’s council regulations, so you can walk into that unrenovated semi and know almost immediately what restrictions and options you have to add value.
That already puts you streets ahead of the competition, literally.
You can dismiss anything with a major “buyer objection” that can’t be fixed.
For example, I would never buy property on a main road, beside a rail line or miles from public transport and shops.
However, if you can put a price on fixing a problem that is putting off current buyers – say, concrete cancer, rotting floors or dodgy wiring – and calculate you can still make a good profit, that’s ideal. You may even get it for a bargain if the market isn’t too overheated.
There are many, many other factors that go into your due diligence; these are just a few examples.
The point I’m illustrating is that buying smartly is a science, not an accident. Sure, a crystal ball would come in handy, but the next best thing are the tools and strategies professionals use to whittle down the vast real estate landscape to a handful of suburbs and properties that promise the best returns.
My 3-day workshops cover these strategies in detail, and judging by the number of people enrolling with renovating for profit right now, this is information that plenty of people need!
If you live in Sydney and you’d like to hear Cherie speak onstage with Chan & Naylor’s Ken Raiss, come along to our free seminar being held at the Zenith Theatre in Chatswood on December 3. To register for this event, or to learn more about Renovating For Profit, click here http://www.renovatingforprofit.com.au/content/event-registrations.
Renovating For Profit
Disclaimer: The above information is for general knowledge purposes only. Please take advice for your specific situation before investing in property. Every person’s personal situation is different and requires a different solution.