Benchmarks for renovation cost

Hi all,

I'm a beginner in property investment and planning for my first one. I like the ideas of buying an old place whose value can be added through renovation. However given I'm a beginner it is hard to estimate how much a possible renovation would cost. I understand the cost is very much dependent on the current condition of the property and also the renovation idea, I think it's useful to be able to roughly estimate the cost while I'm doing property inspection. I was wondering:

• If anyone could recommend some sort of benchmarks of renovation cost (i.e., typically how much for laying new tiles/floorboard, painting walls, etc.)
• If normally is it possible to bring in some handyman/renovators to physically have a look at the place and giving quotes?
• Could you recommend a way to plan for this sort of thing at the inspection stage?

Thanks

 

Look at the Archicentre website cost guide - they list indicative costs for various renovations. And it’s Melbourne-based.

2018 Cost Guide

 

If we're talking reno to sell, you need to make sure the spec of renovation matches the expectations of buyers in the particular area you are renovating. So assume in X area you know you need a medium spec level which will cost 50k. Then you need to make sure the gap between unrenovated and renovated is sufficient enough to allow you a profit, approx $2-3 return for every dollar spent. Don't forget transaction costs etc.

Looks alot easier than it actually is. To be profitable that is.

If you were meaning reno to hold then I wouldnt bother doing any great reno to have it rented. Maybe very basic reno if needed then rent. Once tenants move and you want to sell, then you can do a cost/benefit analysis to see if its worth it.

 

Thanks both. Very useful!

 

If your a beginner I would recommend don't buy a fixer upper unless your a builder or in the industry. You will not make money outsourcing everything especially in this climate.I never use handymen, they are handy but do not do anything to a good quality, they are not trade qualified, if they were they wouldnt call themselves a handyman. If you must renovate, use qualified trades for each trade you need.

 

As a beginner, I would recommend starting small as a full house reno can quickly spiral when you uncover unexpected problems, tradies don't show up, etc and with holding costs too it can hurt. As sackie says, its hard enough just working out what sort of reno to do and what standard of finish.

Could you consider a unit where the renovation is less structural (and hence quicker and generally simpler)? Or ask a family/friend if you can project manage one job for them to get a taste. You can learn a lot from just getting trades to quote on something like painting a room, ie making decisions, seeing their progress, organising payments..

 

Thanks @Otie and @Meristone for the advice. Appreciate it!

I'm only thinking of minor renovation like painting, replacing floorboard/carpet, replacing lights, simple landscaping, not big changes like knocking down walls or adding extra bathrooms.

The intention is to make the property looks nicer and potentially get higher rental yield while (hopefully) not spending a lot of money. Also hopefully that would make the property value going up.

I may sound very naive. Have you done anything similar? Would such minor reno make any noticeable difference in terms of rental income and/or capital gain?

 

You need to follow Cherie Barber. This is her philosophy! Good luck!