How to Trim the Cost of Your Renovation
– 27 Secrets for Keeping More Money in your
Pocket
Prepared by Hotspace Consultants, which is the brainchild of Jane Eyles‐Bennett - award winning interior designer, serial property investor and master renovator!
www.hotspaceconsultants.com
Renovating can be a fun, rewarding and exhilarating experience. And whether you’ve renovated your own property or properties in the past or just witnessed other people’s experiences,
you’ll know that there are plenty of things to learn and traps to avoid during
the process.
The one area where the majority of people trip up is with their budget.
This could be because they simply plan to do too much to their property and end up over-capitalising. Or because they spend too much money on getting what they
plan on doing, done. Or worse, a combination of both!
As a comprehensive 'to-do'-type checklist (including all the colours, fixtures, fittings and materials to use throughout every part of your renovation), freshlywritten specifically for your property, it’s a sure-fire way to only do to your property what is going to add value.
It’s also the smart way to make sure you only spend what you need to spend on your property - and avoid overcapitalising.
The 27 ‘secrets’ in this report give you some good ideas for reducing your renovation costs for the things you do decide to do to your property – so that you reduce the risk of over-capitalising
and increase your chances of making a profit!
AROUND THE HOUSE
Repair and Re-use
Re-use fixtures and fittings whenever possible. Particularly with low budget reno’s, re-using as much of the existing fixtures and fittings is essential. However, you’ll find this may sometimes be the case on more expensive properties too. Only change and update the ‘must do’ items (just make sure the new colours and finishes will tie in with whatever is remaining in the space). You may need to perform some repair work in order to reuse some fixtures and fittings – so work
out the cost to repair vs. the cost to replace before deciding.
Sell, sell, sell
Consider selling everything and anything you are removing from the property.
What you consider as junk might get you even a few dollars toward your renovation costs. Even if you sell the old oven for$50, the old laundry tub for $30, and the old light fittings for $60, there’s $140 to spend on paint or a plumbing job. Your trash is often someone else’s treasure – and it’ll save you on dumping costs too.
Relocate
There are a few things around a property that you can generally relocate to enhance your renovation. Plants are usually easy to relocate, as are pavers and curtains, light fittings and plenty of other things. You might relocate some of your existing fittings to less important or
prominent parts of the property and install new fittings into the immediately obvious areas (e.g. exterior, kitchen and lounge).
Do your own demolition
If you’re a little bit handy, then doing your own demolition is a great way to reduce costs. If you are retaining some of the surrounding elements, then be extra careful when pulling things apart. If you’re not careful, the extra costs to repair the damage caused when you hastily removed a bench-top or vanity or tiles – or whatever, could have better
been spent on someone else doing the work for you.
Remove your own rubbish
Removing your own rubbish and demolished materials from the property is a good way to save costs. It can be messy work, but can save you hundreds (maybe even thousands) of dollars. Tell your trades-people that you will remove all the rubbish yourself and for them to let you know in advance when it will need to be taken away. Sometimes a skip bin is much more practical, so weigh up your options first.
Get a ‘Scrapping Report’ to give your accountant before you start your renovation
In many cases, the fixtures and fittings inside an older property can still be written off prior to removal. This is called scrapping’ or ‘writing off’ and can amount to thousands of dollars in some cases. Although you do not directly save money (in fact you will have to pay a few hundred dollars for the report), you will gain the deductions at the end of the year when your tax return is completed.
Get a Depreciation Schedule once your renovation is completed
Once your renovation is completed, the new fixtures and fittings may then be depreciable. A qualified Quantity Surveyor will do this report for you to pass to your accountant, again for end of year tax deductions.
HOW TO BUY
Buy at auction
There are warehouses all over the place that sell all sorts of fixtures and fittings for bargain hunting renovators. Try auction houses for vanities, taps, baths, appliances and even kitchens. You’ll benefit from end of line items that retailers are trying to get rid of.
Buy in bulk
Some retailers will negotiate their price with you – particularly if you buy more than one or two items at the same time. Buy all your appliances, bathroom accessories, flooring, lighting etc. all at
once to increase your negotiating power. At the very least, try to negotiate free delivery.
Don’t buy retail
Go direct to the source for your best bargains. For example, kitchen retailers usually sub-contract the making of your kitchen to a cabinet-maker – and charge a hefty margin as a result. So buy directly from the manufacturer or at the very least, wholesaler to save truckloads of money. Hunt around for manufacturers and wholesalers selling direct to the public for things such as appliances, flooring, lighting, plants, landscaping supplies and anything else you need for
your renovation.
Set up trade accounts Many retailers will let you set up a trade account if you own a company and can provide them with the details. Discounts will vary depending on how much you buy and how well you can negotiate.
Buy on-line
Shopping on-line usually means you are buying wholesale because there is no showroom and associated costs for sales staff etc. This is in theory, however! Double check that you are getting a good deal and that delivery is included in your costs. You might do your research at local
retailers but then buy the products you select, from an on-line seller. Try:
WHAT TO BUY
Choose in-stock items
Suppliers are much more likely to ‘cut you a deal’ if the products you’re negotiating on are in stock.
Buy factory seconds
Plenty of retailers sell seconds all year round – not just at sale time. Sellers with large showrooms often have an area set aside for less-than-perfect stock ready to
be bought by bargain hunters. Don’t take their discount price at face value – even
though it is already discounted; try your luck on reducing it even more. You’re really doing them a favour by helping clear their floor for full priced stock!
Buy Asian imports
Years ago Asian imports were not the quality they are these days. You can buy an excellent range of well priced items and I particularly favour the cheaper imported products if I am selling a property immediately. Always buy good quality, but you can get away with slightly lower quality in many cases.
Replace like with like
When replacing some fixtures and fittings, it’s a good idea to keep their same size and/or location. For example; replacing light fittings in the same location will save you costs on repairing and painting the entire ceiling. Replacing cabinet handles with the same size as previously will ensure you use the same fixing holes again (and not left with gaps you need to fill). Keeping flooring the same thickness helps eliminate problems with the skirting boards in some cases. Think about what you are replacing and how its differences will affect the areas
surround it.
Replace with bigger and better
This is true ONLY in some circumstances. For example if you are replacing the bathroom vanity but not upgrading your floor or walls, then make sure the footprint of your new vanity is bigger
than the footprint of the old one. This will ensure that any floor and wall damage caused when the old vanity is removed is concealed by the new vanity.
Consider what damage is likely to be caused when removing any item that is going to be replaced and when possible, replace it with something bigger/taller/larger. Eg: a larger wall tile
area to cover damage caused when the old ones are removed, a larger toilet
footprint to cover the old footprint,
larger light fittings to cover fixing holes etc. Eliminating ‘making good’ (restoring damaged surfaces) is a great way to keep costs down.
MANAGING YOUR RENOVATION
Work out your budget BEFORE starting your renovation
So, 1) know your budget and then 2) work out what to do to your property with that amount of money. DO NOT do this the other way round. You must fit your renovation to your budget NOT fit your budget to your renovation. The latter will always lead to overcapitalising.
Know exactly what you’ll do and what it will cost
Knowing in advance exactly what you are going to do to your property is essential for sticking to your budget. You will already have worked out how much money you plan on spending, so now it’s time to work out what – exactly – you are going to do, and what it will cost. Get pricing from reliable and recommended trades-people on every aspect of your renovation before you start a thing. Try to get fixed pricing for everything (as opposed to un-capped hourly rates) and assemble all your supply/delivery/labour prices together on a spreadsheet.
Buy in advance
Give yourself plenty of time to hunt around for the best bargains. Buying in a rush often leads to spending too much. Put the time into researching exactly what you need (dimensions, colour, specifications required) and who will sell it to you for the best price.
DIY Finishing – painting, tiling, gardening etc
If you’re a little bit handy and you have the time, then doing your own ‘finishing’ can save you thousands. I’m not a huge fan of DIY simply because it tends to take so much longer than paying someone else to get it done for you (taking into account the holding/mortgage costs you’ll be
paying for the duration of your reno if you’re not living there). Use good tools and educate yourself on the best way to perform the job at hand. The internet is of course a great place to get help – try
www.eHow.com and type in the search function whatever it is you need to know.
Supply your labour to your tradespeople
Being the errand runner or ‘lackey’ to your trades-people will save costs on their running around for you. You will need to be available to do many sorts of things – sweeping floors, going down to the hardware store, stripping paint, cleaning glass, stripping wallpaper, sugar soaping walls etc. It’ll be physical work but will save you having to pay skilled trades-people to do unskilled work.
Supply products to trades-people and pay them labour only
This is a great idea if you have some experience. Buy the materials, fixtures,
fittings, products etc. for your renovation and deliver them to site for your tradespeople to install. Trades-people will usually add a margin on to any materials, fixtures and fittings they provide, so supplying your own can be an excellent way to trim costs. However, be wary that if there is any problem what-so-ever with what you are supplying to the tradesperson, then they will take no
responsibility for it. For example, this is particularly a problem with electrical
items where the fitting is installed by the electrician but doesn’t work. With a ‘labour only’ contract, you are paying the electrician to install your lights/switches/fans etc only. If there is a problem with the fittings then they will charge you extra to replace or repair them. So on the face of it, supplying your own materials is a good idea, but unless you are an experienced renovator, it can cause real problems. Be careful.
Hire or borrow tools if you choose to DIY
If you’re going to do all or some of the renovation yourself, then you’ll need some tools of the trade. Unless renovating is your business, then you’ll want to avoid spending money on tools as
much as possible. Borrow as much as you can, then hire the rest. Buy tools if you absolutely have to – but if you’re forced to buy the tool to carry out the job, then work out if you’re financially better to just pay a professional to do it for you.
Renovate the whole property all at once
Rather than spreading your renovation over a period of months and having one room completed at a time, it is a real cost saver to have it all done at once.
This of course is not practical if you or someone else lives in the house, but it is the best thing to do for a vacant property. Trades-people will charge more to keep returning, and fixtures and fittings will cost more if purchased individually (rather than in bulk), so get it all done in one go.
Manage your renovation well
When your renovation is under way, visit the site briefly and frequently (if you are not doing the work yourself) to resolve inevitable issues that will arise and risk your budget blowing out. Good
communication between yourself and your trades-people is essential. Make sure they know you are available any time to answer questions and discuss problems throughout the course of your project.
Keep track of variations
Problems and un-planned situations are always going to happen during a
renovation. Even the most experienced renovators can’t predict every problem that arises. The trick is to track and monitor your renovation spending on a daily basis. You will have your costings laid out on a spreadsheet – so as soon as you know about a change to the specification (and price), update your spreadsheet accordingly.
WHAT TO DO NEXT
Establish the potential re-value of your property after it has been renovated
Ascertain how much money you should spend on your renovation to get the best return & avoid over-capitalising
Discuss possible renovation changes that will most effectively magnify the value of your property
Clarify how a Renovation Action Plan will help you:
o Reach the upper limit of your property’s re-value potential
o Ensure your renovation costs stay on track & you don’t overspend
o Know exactly what changes to make to your property in the form of a to-do checklist –
including what areas to
renovate and what colours, products, fixtures and fittings to use throughout
o Transform your property into a valuable asset to re-value (and benefit from the increased
equity) or sell
Presented by Geoff Grover, The BUYER Reach agent, REMAX Property Associates
Coolum Beach, Sunshine Coast
– www.geoffgrover.com.au. – Mobile 0414 337 402 – geoffgrover@remax.com.au
Geoff recommends Jane Eyles‐Bennett of Hotspace Consultants for a professional
Renovation Action Plan
www.hotspaceconsultants.com - info@hotspaceconsultants.com
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