A DIFFERENT APPROACH TO DIY FOR PROFITABLE PROPERTY PROJECTS!
This week we wanted to review the idea of DIY and how we believe this topic should be approached when it comes to creating a profitable property project. Now when I say DIY I am sure everyone is already thinking about painting or something along those lines....maybe laying your own carpets? But often, especially when looking at budgeting a cosmetic renovation this is not the right area to look at when thinking DIY. Below we will look at both the traditional approach and our approach to DIY and why we think you need to think a little outside of the box when it comes to DIY for your projects!
THE TRADITIONAL APPROACH TO DIY
So, obviously the traditional approach to DIY would be looking at a renovation project and identifying which tasks you are 100% required to use a qualified trade for such as the electrical work and which tasks you could do yourself such as paint, landscaping, carpets, tiling etc.
We find a lot of the time when people start to look at the idea of renovating a property and adding value in order to make some extra money that for some reason they automatically go straight to the thought "we could do that ourselves over a few weekends and save some money, then we can increase our profits"
However we have found that there are a number of really big issues if you approach your renovations with the idea of making it a DIY project!
1. Project timeframe
A realistic profit target for a cosmetic renovation would be $35,000 - $50,000. In order to make some really worthwhile profits from a cosmetic renovation you need to be turning these projects over in 3-4 months. This is very difficult if you try to DIY everything!
2. Quality of finish
Unless you are a qualified and experienced trade such as a carpenter, plumber or painter it is not realistic to imagine that your finished work will be of the same standard as work done by a professional. This can become a huge issue when you are trying to sell your house for that top-dollar price range!
3. Certifications, forms and paperwork
In a previous article we discussed how important it is to have the correct documents and certifications ready to back up any issues you might have to tackle with a buyer before the B&P inspection. If you, for instance, install your own termite barrier and you do not have the documents with the $200,000 warranty do you think the buyer is going to feel as comfortable proceeding as they would if it was done professionally? Probably not.
4. Your time!
The fourth point is simply asking you to look at your time and how valuable that is to you. If you are not paying a painter or a tiler to complete the works then you are sacrificing your own time outside of your job to get it done. How valuable is your family time and your down time? Do you really want to be spending the few free hours you have a week on your hands and knees scraping paint of an old skirting board??
We believe that when you are searching for a profitable property project you must complete the project feasibility with the idea of the entire project being completed by trades with yourself as the project manager. This is how we have completed every single one of our projects with us only having to lend a helping hand here and there for some small jobs. It can definitely be done you just need to have the right system in place!
OUR APPROACH TO DIY
As you can see from the start of this article we are pretty adamant that you need to really avoid the traditional DIY approach if you want to make some good money from flipping homes, however we do believe there are some areas that you can and should handle if you want to make sure you make as much money as possible.
1. The worlds best project manager!
This one is extremely important. Although the physical work will be done by the trades you will need to be the glue that sticks the project together. You need to be extremely organised and to have a really strong system in place that will allow you to manage everything to ensure that trades are on site when they need to be; hired equipment arrives when it is required and that all deliveries and pieces of equipment are supplied exactly when required. If you forget to order the tiles this could delay the project by days and the tiler may charge extra, or worse he may get fed up and cancel the job entirely!
2. Analyst extraordinaire!
We have said before that we believe the most important aspect of achieving a good profit in a small-scale renovation is the ability to find and purchase a property at the right price! Remember that your entire renovation budget might be $50,000 now if you buy the project for say $440,000 and that price is 10% higher than you should have paid that extra $40,000 is almost your entire renovation budget! You need to have a really solid system in place to allow you to locate, review and purchase properties at a price that will allow significant value to be added during a short timeframe. Key aspects your system must cover area project location/sourcing, project costings and feasibility, pre-renovation valuation and more importantly post-renovation valuation. If your post-renovation valuation is lower than your target sales price you know that you can walk away and look for another project!
Thank you so much for reading this week! Hopefully these points will help you approach DIY in the right manner and help you make lots of profits on your next project!
We would love to hear from you if you have any questions or feedback. firstname.lastname@example.org.
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Have a great day!