Renovations 🔨 + Tenants being sued

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Welcome to Property Hack! Shedding light on the complex world of property!

Renovating - Dangerous flooring did not deter this buyer. And another homeowner who would’ve preferred a more simple path.

Snippets - A landlord requesting $300k in damages, water flowing through this sustainable home, and a retirement plan that did not go as planned.

Let’s go!

When renovations work well…. and when they don’t

Oliver purchased a property on the main street of a popular 18th century Roman town in the UK.

19 years later it continues to provide a passive income.

A shop below has consistently been rented out and the accommodation above provided somewhere to live during the initial renovation.

How did Oliver know it was a good investment?

The price point was very reasonable; Oliver highlighted that it was an undervalued property, which he purchased off market, privately through a friend.

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“If it had not been a private sale -

it would have gone for a lot more.

It was a bargain.”

Oliver

Despite its dilapidated condition, Oliver saw the opportunity in the property's prime location and dual-income potential - making the challenging renovation worth the effort.

Downsides - Living in the same space as you’re renovating, this could prove quite difficult at times; having a constant reminder that there’s always work to do.

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“You’ve always got it on your mind, you’ve got to do it”

Photo credit: Nolan Isaac

This renovation was no small feat: floors needing total replacement, windows and doors to be installed, plus a complete bathroom and kitchen transformation. 

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“When we first moved in,

the building was almost derelict.”

“You couldn’t go into the front room because the floor could collapse.”

Oliver

Oliver approached the project methodically, focusing on practical solutions with a can-do, proactive mindset.

With a background in mechanics and spending a lot of time around building works, these skills likely all helped with his positive approach to the renovation.

Budgeting - At the time, Oliver was on a strict budget. He was resourceful in re-using building materials from the site, along with buying second hand materials and shopping around.

Upsides - An ongoing passive investment that now requires little work and minimal ongoing maintenance.

Oliver avoided overcapitalising. He carried out only essential work and had stuck to his budget. This helped Oliver to avoid overspending - being able to spend only what he could afford - and the project spread out to fit this budget.

He has now held onto the property for 19 years, with strong capital growth on the property over this period.

Luke and Amy’s project did not go as they’d imagined.

Knowing what they now know, they would have stuck to a much more simple update.

They initially purchased their duplex property as an investment, with the plan to hold on long term and rent out. They’d rented in the area themselves and were happy with the location, access to work, amenities and a hospital close by.

But their circumstances changed and they instead decided to renovate to sell.

The project went over their timescale and budget. The property was sold in the winter months, which was a much quieter time for sales for that area.

Because it was a quieter time to sell, they felt more pressured to accept when a buyer made an offer.

Luke feels with hindsight, they’d have held on to the property and rented it out; updating the property more gradually, and keeping within their budget.

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We’d have just stuck to painting and re-doing the floors to begin. The property didn’t need much.

Luke

The end result:

A short term flip, or long term comfort? Refine why you are renovating.

Know the essentials, and your budget.

Prioritise the most important elements. Avoid overspending & overcapitalising - understand comparable properties.

Putting in a lot may not necessarily give out the same return - especially if it’s not done well or the renovated areas are not adding value or durability.

It can be an advantage to know the area well, the comparable prices for that area and speaking with trusted professionals before embarking.

Quote for the week:

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“If we knew what we were doing it wouldn’t be research.”

Albert Einstein

Snippets:

  • An Australian celebrity couple in New York City have had their deposit withheld, with their landlord requesting $300k in damages, including airlifting a table to access repairs. More here

  • Water flowing through this Sustainable Award Winning home, this highly insulated home has energy savings of around 90% - find out more here 

  • A retirement plan that did not go as hoped. Pensioners believed they were buying into housing security. Read more here 

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Have a great one!

Sam & Jane

The Property Hack Team

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Information in this newsletter is general in nature. Undertake independent research and seek trusted professionals. Names are changed for privacy.