Renovating for Profit in Perth – Expert Advice from Local Builders

G’day, Perth property enthusiasts! If you’ve been thinking about dipping your toes into the world of renovating for profit, you’ve picked a ripper time to do it.

Perth’s property market has been as hot as a summer’s day at Scarborough Beach, and savvy renovators are cashing in. But before you start swinging that sledgehammer, let’s chat about how to make your renovation pay off. I’ve picked the brains of some of Perth’s top builders and investors to bring you the inside scoop on renovating for profit in our fair city.

The Perth Renovation Scene

I remember chatting with my mate Dave over a few coldies at the local in Leederville. He’d just sold a rundown weatherboard in Mount Hawthorn for a tidy profit after a clever renovation. “It’s not just about making it pretty,” he said, taking a swig of his beer. “It’s about knowing what buyers want and delivering it without overcapitalizing.”

And you know what? He hit the nail right on the head.

So, let’s dive into the nitty-gritty of renovating for profit in Perth, shall we?

Know Your Market

Before you even think about picking up a paintbrush, you need to know your market inside out:

Research the area: Understand the demographics of who’s buying in the area.
Study recent sales: Look at what’s selling and for how much.
Identify the ceiling price: Know the maximum you can expect to sell for in that suburb.
Understand buyer preferences: What features are most in demand?

I worked on a project in Subiaco where the owner insisted on adding a pool, despite my advice that it wouldn’t add value in that particular market.

Sure enough, it ended up being a selling point for only a small percentage of buyers and didn’t recoup its cost.

Choose the Right Property

Not all properties are created equal when it comes to renovation potential:

Look for the worst house in the best street: This old adage still holds true.
Check the zoning: Is there potential for subdivision or development?
Assess the structure: A solid structure can save you thousands in repair costs.
Consider the layout: Is it easily adaptable to what buyers want?

I once helped a client snap up a tired old duplex in Scarborough. The location was prime, and with some clever redesign, we turned it into a modern beach house that sold for well above the suburb median.

Set a Realistic Budget

Your budget can make or break your profit margin:

Get multiple quotes: Don’t rely on just one builder’s estimate.
Include a contingency: Always add 10-20% for unexpected issues.
Break down costs: Know exactly where your money is going.
Be realistic about your DIY skills: Sometimes, hiring a pro is more cost-effective in the long run.

I had a client in Maylands who thought he could save money by doing his own tiling. Let’s just say it ended up costing more to fix than if he’d hired a professional from the start.

Focus on High-Impact, Low-Cost Changes

Some renovations give you more bang for your buck:

Paint: A fresh coat of paint can transform a space for relatively little cost.
Kitchens and bathrooms: These are still the rooms that sell homes.
Flooring: Updating old, worn flooring can dramatically improve a home’s appeal.
Street appeal: First impressions count, so don’t neglect the exterior.

In a recent Como project, we focused on updating the kitchen and bathroom, and giving the whole house a fresh paint job. The owner spent $50,000 and the house sold for $100,000 more than comparable unrenovated properties in the area.

Don’t Overcapitalize

It’s easy to get carried away, but remember, you’re renovating to make money:

Stick to your budget: It’s tempting to add “just one more thing”, but costs can quickly spiral.
Keep the end goal in mind: You’re not creating your dream home, you’re creating a product to sell.
Match your finishes to the market: Don’t put top-of-the-line fixtures in a mid-range suburb.
Be careful with trends: Classic, neutral designs have broader appeal.

I once saw a renovator in East Fremantle install a high-end European kitchen in a modest suburban home. It looked out of place and didn’t recoup its cost when the house sold.

Understand Perth’s Unique Climate Considerations

Our climate affects renovation choices more than you might think:

Insulation: Good insulation is crucial for our hot summers and cool winters.
Outdoor living: Perth buyers love indoor-outdoor flow.
Solar panels: With our abundant sunshine, these are becoming increasingly popular.
Water-wise gardens: Low-maintenance, water-efficient landscaping is a big plus.

In a Cottesloe renovation, we created a stunning alfresco area that effectively doubled the living space. It was the feature that sealed the deal for the eventual buyers.

Navigate Council Regulations

Falling foul of council regulations can be a costly mistake:

Check zoning laws: Understand what you can and can’t do with the property.
Get the right permits: Don’t start work without the necessary approvals.
Be aware of heritage restrictions: Some areas have strict rules about what can be changed.
Understand energy efficiency requirements: New builds and major renovations need to meet certain standards.

I had a client in Mount Lawley who didn’t realise their home was heritage listed. We had to completely redesign the renovation to meet heritage requirements, which blew out both the timeline and budget.

Time Your Renovation and Sale Right

Timing can have a big impact on your profit:

Consider the property market: Are prices on the up or down?
Think about seasons: Spring is traditionally a good time to sell in Perth.
Factor in construction times: Delays can eat into your profit.
Be aware of major infrastructure changes: Upcoming improvements in an area can boost prices.

We completed a renovation in Inglewood just as the new Woolworths opened nearby. The increased amenity in the area helped push the sale price well above what we’d initially anticipated.

Don’t Neglect the Basics

While fancy features are nice, don’t forget the essentials:

Electrical systems: Ensure all wiring is up to current standards.
Plumbing: Old pipes can be a ticking time bomb.
Roof: A sound roof is crucial in Perth’s occasional heavy rains.
Rising damp: This is a common issue in older Perth homes and needs addressing.

In a Fremantle worker’s cottage renovation, we discovered the entire electrical system needed replacing. It was a high, unexpected cost, but ignoring it would have been a safety hazard and a major turn-off for potential buyers.

Create a Point of Difference

In a competitive market, your renovation needs to stand out:

Unique features: Think built-in barbecue areas, wine cellars, or smart home technology.
Energy efficiency: Features like solar panels or grey water systems can be selling points.
Flexible spaces: Home offices or multi-purpose rooms are in high demand.
Character features: In older homes, restoring original features can add value.

We added a small plunge pool to a Leederville terrace renovation. It was an unexpected feature in that type of property and ended up being the talking point that sold the home.

Stage Your Property for Sale

How you present your renovated property can significantly impact the sale price:

Hire a professional stylist: They know how to showcase your property’s best features.
Declutter: A clean, spacious feel is crucial.
Consider your target market: Stage the home to appeal to the most likely buyers.
Don’t forget the exterior: Curb appeal is your first chance to impress.

We renovated a small apartment in East Perth and hired a stylist for the sale. Their clever use of furniture made the space feel much larger, and the property sold within a week for above the asking price.

Build a Reliable Team

Renovating for profit is rarely a solo endeavour:

Find a trustworthy builder: Look for someone with experience in renovation projects.
Develop relationships with tradies: Reliable, quality tradespeople are worth their weight in gold.
Consider using a buyer’s agent: They can help you find the right property to renovate.
Don’t forget your accountant: They can advise on tax implications and help maximise your profit.

I’ve been working with the same core team of tradies for years. Their reliability and quality of work have been crucial to the success of my renovation projects.

Learn from Each Project

Every renovation is a learning experience:

Keep detailed records: Track what worked and what didn’t.
Analyze your profit margin: Understand where you made and lost money.
Stay up to date with trends: What buyers want can change quickly.
Be open to feedback: Listen to what potential buyers say during inspections.

After each project, I sit down and go through what we could have done better. This continuous improvement has been key to increasing my profits over time.

Consider the Full Costs

Remember, your profit isn’t just the difference between purchase and sale prices:

Stamp duty: This can be a high cost when purchasing.
Holding costs: Factor in mortgage repayments, council rates, and utilities while you own the property.
Real estate fees: Selling costs can eat into your profit.
Capital gains tax: Don’t forget to factor this into your profit calculations.

I always advise my clients to create a detailed spreadsheet of all costs. It’s often eye-opening to see where the money really goes.

Know When to Cut Your Losses

Sometimes, the best way to profit is to know when to walk away:

Set a budget limit: Know at what point the renovation becomes unprofitable.
Be prepared to change plans: If the market shifts, be ready to adapt.
Don’t get emotionally attached: Remember, this is a business decision.
Have an exit strategy: Know your options if things don’t go to plan.

I once worked with an investor who realised halfway through a renovation in Victoria Park that they were overcapitalizing. We quickly changed tack, finished the essential works, and sold the property. They made less profit than they had hoped, but avoided a significant loss.

Wrapping It Up

Renovating for profit in Perth can be a lucrative venture, but it’s not without its challenges. It requires a keen eye for potential, a solid understanding of the local market, and the ability to stick to a budget. Remember, you’re not creating your dream home – you’re creating a product that will appeal to the widest range of buyers in your target market.

The key to success lies in thorough research, careful planning, and smart execution. Don’t be swayed by fancy features or personal preferences. Instead, focus on what adds real value in your specific market. And always, always factor in a contingency for those unexpected issues that inevitably crop up.

Perth’s property market has its own unique characteristics. Our love of outdoor living, our climate considerations, and our mix of heritage and modern homes all play into renovation decisions. What works in Fremantle might not work in Joondalup, so always tailor your approach to the specific area and target market.

Remember too that renovating for profit is rarely a get-rich-quick scheme. It takes time, effort, and often several projects to really hit your stride. Each renovation is a learning experience, so be prepared to adapt and improve with each project.

Lastly, don’t underestimate the importance of a good team. From your builder and tradies to your real estate agent and accountant, having reliable professionals on your side can make all the difference to your bottom line.

So, to all you aspiring renovators out there, I say go for it! Perth’s property market is ripe with opportunity for those willing to put in the work. Who knows? That rundown weatherboard in Bassendean or that dated apartment in Applecross could be your ticket to renovation riches.

Here’s to your success in the Perth renovation market. May your profits be high, your setbacks be few, and your newly renovated properties be snapped up faster than tickets to the AFL Grand Final!