Duplex Reno adds $94,200

Audra Finlay, and her husband Darryn made an unusual – and potentially stressful - start to their married life when they decided to renovate a 2x2 BR Duplex rental property in Redbank Plains, Queensland. They bought the property just before they headed off to Vanuatu for their wedding in November 2008. When they got back from their honeymoon (interrupted by emails regarding paperwork for the purchase) everything was in place for them to start. 

Keeping the tenants happy for a profitable outcome
 
“Settlement happened on 24^th December, 2008 and renovations commenced on 28^th December 2008, on Unit 1,” explains Audra. “We didn’t think that we would be able renovate Unit 2 until the tenant’s lease expired and she left, but she saw what we were doing to Unit 1 and she liked it so much she moved into it on 30^th January, 2009, which enabled us to renovate Unit 2 straight away, and we had a new tenant in Unit 2 by 2^nd March, 2009.”

It was a remarkably quick turnaround with minimal disruption to the rental income. “Both tenants said that we have changed their lives considerably and that now we have tenants for life due to the difference we’ve made to their living arrangements. The next chapter to this story is to approach them to purchase each of their units – a win-win situation for both parties.”

Audra bought the units for $350,800 (with a total rental value of $360 pw) and spent $33,350 on renovation costs; in November 2009 a real estate agent valued each unit at $250,000 (with a total rental value of $520 pw).    They have also 'group-titled' the pair, meaning the two are on separate titles and can be sold individually.  A summary of the project costs is below :

Learning on the job
 
But, inevitably, it wasn’t completely straightforward. “It was our first major renovation and it was extremely difficult to put a realistic budget together when we didn’t really have any idea on the cost of items.”

Whilst Audra was careful to negotiate good deals, she didn’t always get what she’d bargained for.  “We were diligent about the prices we paid for things but not necessarily what may fit or what direction things needed to face - purchasing  ‘bargain’ bathroom vanities without checking where the plumbing was situated in the bathroom, so the plumbing came through the side of the cabinet when the cabinet purchased allowed for the plumbing to come through the back. The ‘bargain’ bathroom vanity also came with non-Australian standard fittings.

When installing the kitchen sink we realised that we had purchased a left hand drainer when in fact we needed a right hand drainer. That meant a last-minute dash to the hardware store to have one for the kitchen installer to fit whilst he was on the job.”

Testing, testing circumstances

There were other challenges too, such as a lack of electricity. “We were using a very small petrol generator that struggled to cope with the two pedestal fans, grinder, lights and drill all working at the same time in the middle of summer (the new marriage was tested…).

“Trying to do the renovations over the Christmas period also provided many challenges – getting the tradies to work for us was near impossible. We managed to engage a tiler to do the work, but do you think we could get him to turn up when we needed him? He was reliable on Unit 1 but he dodged and weaved until the last weekend before the tenant was going to move in.”

And Audra’s new husband, a brand new homeowner, had an especially steep learning curve. “Darryn had never painted a house/unit before until this project. We had to turn blue walls into light beige walls and we also had to try to get peeling paint off the laundry/bathroom skylight chute and replace the paint with paint that acctually stuck to the walls of the chute. Every time Darryn put a coat on it would peel straight back off (with the heat coming through the skylight). This was a frustrating challenge and it took him the whole renovation for him to succeed.

But despite the challenges, they pulled through. “We learnt a lot, had fun throughout the project and the local hardwares store is our best friend for knowledge, assistance and products.”

It’s never too late to develop a property investment strategy

Audra’s become successful in a very short space of time. “Never think it’s too late,” she says. “At age 47, our principal place of residence was the first property/home my husband had ever bought. That house was the beginning – it sparked an interest in property investing and we soon realised that with our equity we could purchase more property! We have purchased ten properties in the last two years, focusing on a renovation strategy while honing in on properties with a "twist". I’m happy to say our portfolio is now $4million and we receive $12K every month from rental income.”

Audra’s tips for new investors include:

1. “Select your strategy and know what you are looking for within that strategy;
2. Make sure you do your research to select an area that you want to purchase in and that it meets your strategy goals;
3. Engage a finance broker to assist you with your mortgage selection and to give you advice on your borrowing capacity;
4. If you end up going around in circles with your research or you feel that you are never satisfied with your research, engage a buyer’s agent to assist you with your first purchase.  They will match a property up with your strategy.”

And Audra has one last piece of advice: go on a course to educate yourself. “No matter how many property courses or seminars that we attend we always find something that we have not thought about that we could do or use to put ourselves ahead.  Whether it is a better way of doing something in regards to renovating or a new avenue to explore in property purchasing we are constantly learning and are hungry to learn about it.”

Get more expert advice and insider tips by joining the Renovation Success Online Home Study Course commencing on 12^th February, 2010.  Click here to reserve your place.