Put your hand up if you’ve done a renovation, then sold the improved property for a profit?
Yep, thought there might be a few of you out there. Reno flipping works and done correctly it does make money. It’s a great property investment strategy if you can find an undervalued property (think worst house in the best street) and give it a cost-effective makeover, then sell it on. It’s particularly good in a gently rising market just as buyers start to outnumber sellers.
You can certainly become a pro at reno flipping but here’s the thing: it’s not scalable. Most flippers tackle one project at a time and there’s not a lot of room to improve your profit margin.
So you’ve decided to think about tackling a property development. Nothing too big or complicated; maybe a small sub-division or a duplex or a four-pack of townhouses.
Can you take your reno flipping skills and apply them to small-scale development?
Actually you might be surprised at the number of transferable skills.
While there’s a lot you won’t know when you take on your first property development, your experience in buying, renovating and selling property will still be a huge asset as a developer.
Site analysis
While you may not have experience assessing a site for its suitability for development, you will have analysed different suburbs and individual properties to see if they fit the bill for a money-making reno flip. If you understand what makes a great location and which dwellings lend themselves to an easy makeover you’re a couple of steps ahead of any newbie out there.
Market analysis
As with site analysis, your market analysis skills will also be well-honed. You will have had to think about your target market: who will buy your finished product? You already know that if you renovate a home to suit your tastes and not the prospective buyer’s taste, you’re unlikely to get top dollar when you sell.
You can reuse these skills in property development, researching who’s buying what and where, using tools like National Property Data, RP Data and Pricefinder. This knowledge, when applied correctly, is instrumental in maximising your returns.
Keeping an existing house
If there’s a tired house on your development site that you either have to keep, or decide to keep because it has too much intrinsic value, you’ll be able to use all of your current skill set to add value to that property. You’ll quickly understand what to upgrade and how to tweak the floorplan.
As a seasoned renovator, you won’t be put off by the work involved in transforming an existing house, which means you’ll be able to tackle a larger range of projects than someone who has never reno flipped and baulks at every renovator’s delight that crosses their path.
Budgeting
You can’t maximise your reno flipping profits without knowing how to create and stick to a budget.
You need to set a budget for the initial property purchase, taking into account any loan repayments; a budget for the renovations including contingency for cost overruns; and a budget for other items like insurance, legal fees and agent fees. And you’ll need to know where the money is coming from.
Well, it’s not so different for small-scale development. You’ll still need to manage a budget, albeit a bigger one, and you’ll still need to source your funding.
It’s also critical not to overcapitalise. As a reno flipper or developer your goal is to create value but not go wild and invest money that’s unlikely to translate into a higher sale price.
Time management
Time is both your friend and your enemy when it comes to making money from property and that goes for reno flipping and developing. Basically, the quicker you can finish a project and sell your newly created lots or homes, the lower your holding costs will be.
So setting a realistic timeline and sticking to it as closely as you possibly can is as important as budgeting. Of course delays are almost inevitable thanks to inclement weather, council hold-ups, tradie availability or unexpected building issues, but with strong time management these delays can be kept to a minimum.
Project management
Budgeting and time management both feed into this critical skill. One of the keys to making money as a reno flipper or developer is to keep all the pieces of a project moving simultaneously. From scheduling trades to paying bills, from choosing fixtures and finishes to ticking off the conditions for development approval, a good project manager will be able to keep dozens of balls in the air at once without blinking.
If you had great systems in place for your reno flipping you may be able to transfer these systems to manage your small-scale development.
Make the move
Transitioning from reno flipping to small-scale development doesn’t have to be a big leap of faith. Most of you will already know that this is the next step you need to take to supercharge your bid for financial freedom.
Yes, you’ll be learning lots of new stuff but you’re also coming at it with a very solid knowledge base.
I know a lot of you come to the Property Developer Network from other educators who tend to deliberately create confusion. They design a complicated path to financial freedom because it creates more sales opportunities for their business.
Many of you have come down a path where you’ve been taught to move from one strategy to the next, to the next. In contrast, our Property Development Formula program teaches one strategy that is scalable, with one council and three suburbs.
It’s time for all you reno flippers to graduate to a scalable property development strategy!
Yep, thought there might be a few of you out there. Reno flipping works and done correctly it does make money. It’s a great property investment strategy if you can find an undervalued property (think worst house in the best street) and give it a cost-effective makeover, then sell it on. It’s particularly good in a gently rising market just as buyers start to outnumber sellers.
You can certainly become a pro at reno flipping but here’s the thing: it’s not scalable. Most flippers tackle one project at a time and there’s not a lot of room to improve your profit margin.
So you’ve decided to think about tackling a property development. Nothing too big or complicated; maybe a small sub-division or a duplex or a four-pack of townhouses.
Can you take your reno flipping skills and apply them to small-scale development?
Actually you might be surprised at the number of transferable skills.
While there’s a lot you won’t know when you take on your first property development, your experience in buying, renovating and selling property will still be a huge asset as a developer.
Site analysis
While you may not have experience assessing a site for its suitability for development, you will have analysed different suburbs and individual properties to see if they fit the bill for a money-making reno flip. If you understand what makes a great location and which dwellings lend themselves to an easy makeover you’re a couple of steps ahead of any newbie out there.
Market analysis
As with site analysis, your market analysis skills will also be well-honed. You will have had to think about your target market: who will buy your finished product? You already know that if you renovate a home to suit your tastes and not the prospective buyer’s taste, you’re unlikely to get top dollar when you sell.
You can reuse these skills in property development, researching who’s buying what and where, using tools like National Property Data, RP Data and Pricefinder. This knowledge, when applied correctly, is instrumental in maximising your returns.
Keeping an existing house
If there’s a tired house on your development site that you either have to keep, or decide to keep because it has too much intrinsic value, you’ll be able to use all of your current skill set to add value to that property. You’ll quickly understand what to upgrade and how to tweak the floorplan.
As a seasoned renovator, you won’t be put off by the work involved in transforming an existing house, which means you’ll be able to tackle a larger range of projects than someone who has never reno flipped and baulks at every renovator’s delight that crosses their path.
Budgeting
You can’t maximise your reno flipping profits without knowing how to create and stick to a budget.
You need to set a budget for the initial property purchase, taking into account any loan repayments; a budget for the renovations including contingency for cost overruns; and a budget for other items like insurance, legal fees and agent fees. And you’ll need to know where the money is coming from.
Well, it’s not so different for small-scale development. You’ll still need to manage a budget, albeit a bigger one, and you’ll still need to source your funding.
It’s also critical not to overcapitalise. As a reno flipper or developer your goal is to create value but not go wild and invest money that’s unlikely to translate into a higher sale price.
Time management
Time is both your friend and your enemy when it comes to making money from property and that goes for reno flipping and developing. Basically, the quicker you can finish a project and sell your newly created lots or homes, the lower your holding costs will be.
So setting a realistic timeline and sticking to it as closely as you possibly can is as important as budgeting. Of course delays are almost inevitable thanks to inclement weather, council hold-ups, tradie availability or unexpected building issues, but with strong time management these delays can be kept to a minimum.
Project management
Budgeting and time management both feed into this critical skill. One of the keys to making money as a reno flipper or developer is to keep all the pieces of a project moving simultaneously. From scheduling trades to paying bills, from choosing fixtures and finishes to ticking off the conditions for development approval, a good project manager will be able to keep dozens of balls in the air at once without blinking.
If you had great systems in place for your reno flipping you may be able to transfer these systems to manage your small-scale development.
Make the move
Transitioning from reno flipping to small-scale development doesn’t have to be a big leap of faith. Most of you will already know that this is the next step you need to take to supercharge your bid for financial freedom.
Yes, you’ll be learning lots of new stuff but you’re also coming at it with a very solid knowledge base.
I know a lot of you come to the Property Developer Network from other educators who tend to deliberately create confusion. They design a complicated path to financial freedom because it creates more sales opportunities for their business.
Many of you have come down a path where you’ve been taught to move from one strategy to the next, to the next. In contrast, our Property Development Formula program teaches one strategy that is scalable, with one council and three suburbs.
It’s time for all you reno flippers to graduate to a scalable property development strategy!
