04: Real Life Renovation for Profit

Did you know with just two investment properties and one single renovation that you could put over a million dollars in the bank? It's true. And why stop there? Welcome to your Property Success podcast, the show that explores the practical steps to making your property investment dreams a reality. And now here's your host, a lady whose handbag contains a current license to drive a 250 tonne truck. Jane Slacksmith.

That is true. I do have a licence to drive a 250 tonne truck.

And that's because you drive trucks in your spare time.

No, no, actually I probably up for a revision of that licence, but I've got a licence to drive trucks and draglines.

Well, how big is a 250 tonne truck?

Well, you could park a Ford ute in to the bucket.

So this is one of the big tippers.

That's big tippers.

Yep.

And if you stood next to it, your hard hat would probably come up to the top of the rim and yeah, a bit expensive. You have to change tyre. About $10,000 each. So very big and lots of fun to drive. In actual fact, they're so big they pretty much drive themselves.

Still pretty impressive.

It is, it is. But enough of all that. So we have a very exciting episode coming up today, which is another first for our little podcast. Now, you may remember in episode one we talked about wanting to incorpor not only theory but also real practical information on property investing. And this week, John, you've been out and about with your microphone to bring us our very first case study.

Yeah, I have. I've been speaking to this guy.

Yeah, John, my name's Russell and currently a maintenance manager at a theme park out in Whittlesea. And this is my first renovation.

Yeah, so very first renovation project for Russell and his wife Heather. And you may have even read their story. They're in API, Australian Property Investor magazine, at one point last year after they finished this renovation.

Look, I love this story and I know just how helpful stories are and how they can really help people because I know when I was Starting out over 15 years ago, I couldn't get enough of the stories like this. And I shared that in the second podcast with Jan Summers. I really loved her book when she was actually sharing the case stories as well. And you know, to see what people have done and how they did it and you know, this kind of thing's a really great shortcut and allows you to put the pieces of the jigsaw together a lot faster because it's so important to get it right. The first time. And why not learn from someone else's mistakes?

Yeah, absolutely. I think this case study is a really great example of your tried and strategy, a really practical example because Heather and Russ are. They bought below the market, they renovated the property to add value and they chose an area with good predicted capital growth. So you'll hear all about that and also some of the other criteria they've used, which is very much along the lines of what you heard in the first three episodes. And the result was they made $25,000 in a 16 day renovation. And but probably over and above that is just the fact that this has just now set them up to build a property portfolio.

Wow. Creating over $1,000 a day is not hard work, is it?

No, it's pretty good going.

But it wasn't all smooth sailing, I understand.

No, it wasn't. In fact, it pretty well required a complete transformation in mindset to even get going. So just have a listen to this.

We've talked about investing for 25 years and we do all the right things. We look, never commit. Because once we get to that point, it's well, what if something happens? What if you lose your job? What if you run out of money? Something goes wrong and you end up with nothing. Which is not the case. But we had every reason not to. So we were just handbraked and too scared to do it.

Yes. This is something that holds so many people back, overcoming those fears of taking action. And in episode two, Jan Summers shared a story about the three frogs on the leaf lily pad. And she said three of them decided to jump. So how many were left? There was three left. Three, because they only decided to jump. There's a big difference between deciding to do something and actually doing it. But worst of all is not starting at all. Because it's never too late to get started. It doesn't have to be perfect. And that's why I think today's case study has so many lessons for all of us. So, folks, let's take a journey together with Russell on our very first case study.

So we're in a residential street north of Melbourne, a few cars going past. Where are we, Russell?

We're just on 7k's from the CBD on the border of Thornbury and West Preston.

Okay, so before we talk about the house itself, what made you choose this area?

Well, I did Jane's dot map in the northern corridor and I wanted to be as close as Melbourne as possible. And I also wanted, I had different criteria like the yield, the growth over the last 10 years and where its projected growth was. Yep. And ultimately where we could afford. Yep. And Preston or West Preston. I actually wanted to go reservoir and West Preston was a little bit too out of our range for money. So.

Okay.

Yeah, we were looking in reservoir initially and what changed? My wife said to me, look, I've found a house in West Preston that we could afford. And I thought, yeah, terrific, we'll go and have a look.

Alright. So you rolled up here at the front of the house here. What was your first impressions when you arrived?

Well, we drove past and we parked next door and as we just slowly went past, she said, there's the house. And I thought, you've got to be joking. Why? It was a wreck. It was a, an ugly brick clad old clunker.

Yep.

With a broken down front fence, a rusted roof. Yep. Overgrown bushes. It looked horrible. And I thought, you've got to be Jake. And she said, well, that's exactly what you asked for.

That's the criterion. Yeah. And when you went, did it get any better as you went through it?

No, it didn't actually.

At what point did you come around to the fact that it was probably along the lines that your criteria said?

Well, she had a little chat to me and I had an attitude readjustment and once we could see past the bad stuff, it had good bones and we could see the potential. So we went for it.

Yep, great, that makes sense. And did you look at many other houses?

Yeah, we went to a number of houses. Not in West Preston actually in Reservoir, which was probably a suburb that we could afford, but we'd been to a number of auctions and I'm not a fan of auctions. There seems to be a lot of bidders at the times and you couldn't get that bargain. So I was a for sale type person.

Yep. And so I take it this one didn't go for auction.

This did go for auction perhaps two months earlier and it was passed in.

Okay.

So it went on the market for sale and that's when we struck.

Okay, well tell us about that. Tell us about the offer process and how did that go?

The offer process didn't go very well actually.

Okay.

When we went through it and we decided to make an offer, it was passed in at 625,000. So I said to my wife and.

Do you know if that was a vendor bid or that was a genuine bid?

No, I don't, don't. We just know it was passed in through a bit of research. No one told us that we had to dig that out. But I put in an offer of 628 and they laughed at us. So I said to Heather, I don't know what to do. And she said, all right, well, I'll take over and I'll have a go. And she did a little bit of backwards and forwarding and they accepted 640,000.

So you went from 628 for the first offer to 640?

A little bit. 635. Okay. And then 640 and they came down from 676.

676, great. So buying under market. So ticked for the first part of the Trident strategy.

Well, it didn't stop there, actually. They had a very last hurrah and they had an open house just before we signed the contract and they wanted people to come in and perhaps make another offer to beat ours. But I think the state of the house sort of scared a lot of people. So our offer stuck and we signed.

So as we can hear, There we go, a few cars going past. It's a little bit of industry on one side of the street, residential on the other. Not a seriously busy road, but there's a few cars going past. Tell us a little bit about the area in the immediate vicinity to the house.

Well, I think the area was a little bit undervalued due to the industry on the other side of the road. But in the years to come, that's all going to be demolished and the council wants residential areas and they're building cafes and different infrastructure like that. So it won't be today and it won't be tomorrow, but in the next couple of years it'll be a very different looking place. So I think the idea is to get in beforehand and that's what we've done.

Okay. And you were able to find out about a bit about that before you bought the house?

Yeah, we did all that due diligence first and come up with that, and that's why we made that decision.

So these. And if, if I stand back and have a look, there's a little. There's a few workshops. I can see these workshops over here are already closed down, they're empty. So that would bode well for some redevelopment there. And there's a couple of other kind of factories, manufacturing going on as we go further up the street. And so council's got plans to make this, turn those into a residential down the track.

Yeah, well, already there's one, two, three or four buildings in front of us. One's gone already and on the other End they're already building townhouses, so it certainly started a little bit sooner than I would have thought.

Okay, great. Alright. What about. Just describe the house for us. I imagine it's. What would it be?

It's about 1928. Yep. And three bedroom on about 530 square metres.

Okay. And the house, not too much setback, so you'd probably. What would it be? It'd probably be maybe 6 metres setback. So you should have a bit of room out the back there.

It's got quite a nice backyard.

Yep.

And the tenants now have a veggie garden and a shed and a couple of big trees in the back. It's quite pleasant.

Okay, so when you looked at the house originally, when you did the walkthrough, how much of appreciation did you have for the work that needed to be done?

Initially I was probably scared, I'd say where the house had dropped, the plaster was cracked and actually protruding. So it looked quite serious. And a lot of the. It had lather and plaster and that was quite nasty. When a house drops, it nearly falls off. So it looked very bad. And in actual fact, a friend of mine who was also an investor, he came along with me and we walked through it.

And was that on the first inspection.

That he came along on the second? Actually?

Yep.

I took him back in there and it turned out that it wasn't so serious and quite easily fixed, actually.

Ok, so we'll start on the outside. Maybe we'll have a bit of a walk around and you can tell us some of the stuff that you did. So as if we just stand out here, we're still at the front on the road here. You can hear a few cars going past as we look at the front here. What are some of the things you did, Russell?

Well, we only had 16 days due to work constraints. My work would only give me a couple of weeks off. So we had 16 days in total and we just had to go for it. So I almost did the minimum but made it very presentable. So from the start. Well, the front fence actually had a car go through it prior to us buying it. So that had half a front fence. And what was left was. Was probably built in 1930, I think.

Right.

So we replaced that with a white picket fence. Yep. Yep.

Which looks very nice. Yep.

And then the front part of the roof had actually holes. You could see daylight straight through. So we replaced that part of the roof.

And the roof was corrugated iron?

Yeah, corrugated on. Same color.

Yep.

Just looks new.

So what made you pull the trigger? On this one, mate, how did you know there was a profit in it, this job?

Well, when I looked at it and we worked out the sums on what needed replacement or repair, I thought I could do most of the work myself, so I'd keep a lot of the cost down, and I had to potentially buy it for undervalued, and it had good predicted growth. So I thought all those things is going to lead to profit.

Yep. And did you have trade experience or are you a tradesman or.

Well, I'm maintenance manager at a theme park. So we pretty much do everything. If it's inside the fences there, we do it. Whether it be carpentry or irrigation systems, plumbing, we do everything.

Right. So you're pretty handy. And I imagine you'd have some access to power tools and that kind of thing as well.

Yeah, yeah. And my dad was a builder as well.

Okay. Okay. And did you. Did he help out or did your family help out on the.

No, my dad's 88 at the moment, so he has no interest in working.

Slacking off, is he?

Yeah, absolutely. I did have to get a little bit of help, and it really annoyed me. But because I only had 16 days, I was very limited with time. So in particular with the roof, it was right on the road, so I had to use a licensed plumber. Yep. And he came and did that. And there was one section of plaster on a roof that I had a plasterer come in and do that for me as well. That saved me a day.

Yep.

Other than that, we did everything else.

Great. Okay, so as we come around the side of the house here, Russell, what's some of the work you did out here?

I did very little outside, but if you look up here, I had to refix the gutters. I didn't actually replace them. I had to refix them because all the water was coming off the roof and straight down the side of the house.

Okay.

Into the stumps.

So it was running. So there was holes in the gutters?

No, it was actually unclipped, and it looked like it had been unclipped for the last 15 years.

So the water was coming straight off the roof and onto the ground.

Absolutely, yeah.

Yep. Yep. And it was a pretty major restump job that you had to do.

Well, we had to raise the house and. Or should I say lift the house.

Yep.

And level it up and then replace a couple of stumps around the edges.

And did you do it from underneath the floor or did you pull up the floorboards?

No, I did it from underneath the floor.

Oh, okay.

Yeah, that was hard work.

Fair bit of work.

Got it.

Okay, so as we go around, we're coming out to the backyard here and yeah, quite a sizable backyard. Just describe the backyard for everyone, Russell.

Well, the whole block is about 530 square meters and the house is reasonably close to the front of the street. Maybe between six and eight metres, I suppose from the street. So it's quite a pleasant backyard with large trees here and a shed, single car garage. And I see the tenants have a few veggies here now.

Looks good, doesn't it? And so you've got neighbours on each side. It's pretty standard kind of suburban backyard really, isn't it? There's no real overlooking. It's just a good size for the area.

Yeah, it's all about the same. I think originally it ended up being housing for the railway workers back in the late 20s.

Yep, yep. So out here in the backyard, did you do any work out here at all?

All we did was clean it up. The lawns were quite long. Needed a good cleanup and brush cutting and lawn mowing and that's as far as we went.

Great. Okay, Russell. So as you come inside here, it's got a central hall, it's got bedrooms off to either side. And then what looks like the, the living area up to the right, I can see there through.

That's right. And then towards the end of the hall is the kitchen on the left.

Right.

And.

And then you've got amenities out the back too.

We have a toilet at the very end of the house and we also have the bathroom just past bedroom one here on the left.

Alright, so as we look down the hallway here, what's some of the work you did in the hall?

Well, in here the ceiling was really bad because of the stumps. And I ended up putting a running furring channel down the hallway and then putting a fake ceiling in with plaster.

And that was to cover up the. The ceiling. Was it falling off?

Was it?

The plaster was falling off.

It was falling off, yeah. And the cracks were probably finger deep and. And it looked like it was going to cave in.

Right, okay. And so you put some like aluminium furring channel, screwed that straight onto the ceiling joists and then put a sheet of plaster over the top of that. Yeah, yeah, yeah. Great. Okay. And. And the walls, I can see some, some textured paint on here. Was that you or was that existing now?

That was actually existing textured paint, different colour. But after I repaired the walls, there was a few sort of smooth spots and it looked a bit odd, and I didn't have time to take it off, so we just retextured.

And was there much damage to the plaster on the walls in here?

The plaster was atrocious.

Right.

The cracks were significant. And I think when people originally came in here, they thought the house was going to fall down, I would think.

Yeah. Because I imagine the side of the combination of textured paint, ceiling hanging down, big cracks in the walls. It would have looked pretty like a lot of work.

Yeah, yeah, it did.

It looked much worse than what it was with the stumps in the condition they were. The lather and plaster tends to just crack and actually fall on the floor. So it was much worse than what it was.

Okay. All right, so we come down the hall. Now, floor, you mentioned already when we're outside that you did some restumping. Was much of that in the hall?

It was off to the left of the hall, really bad. In the bedroom one on the left of us.

Yeah.

And towards the center, between the lounge room and the kitchen.

And do you put that down to that, that water leak that we saw outside?

Absolutely, yeah.

It was.

The water must have gone. Missed the. Missed the gutter and gone straight under the house. And it looked like it was leaking for years.

Right. Okay. So anything else in the hall here you've got. Is it. They look like they're the original lights.

Are they original lights? Yes. The only thing that's different is the ceiling and the different textured color paint.

Yep. And you put a coat of paint over the top of the texture.

Correct. Yeah.

Yep. Got it. Okay, well, let's have a look in the bedroom. So we'll go in the first one here off to the right. All right, you want to describe this for us, Russell, and just let us know what you did in here?

Yeah, look, the plaster was cracked again. New carpet on the bottom, plaster repair and paint. And new curtains. Yep. We used the original blinds, but new curtains, and they're only a couple of dollars from Spotlight, my wife got.

Great, great. And floor covering.

We used it, a builder's choice, specifically for tenants. It's a bit harder than normal.

And do you remember what that was? A broad loom meter.

Well, I know the total cost was about $1200. And that was for the three rooms. We did the bedroom one, two, and.

The lounge room for 1200 bucks. Great.

And he also took the original carpet out of bedroom one, which was quite good, and put it into bedroom three, which is right down the other end of the house.

And you Got the carpet layer to do that?

We did, yeah.

Excellent. And just a repaint. So not too much work in here really in the bedroom?

No, it was really just a matter of fixing up the cracks. And towards this side of the house, which is the right hand side of the house, it wasn't as bad as the left hand side.

Alright, well let's go across the hall and take a look at the left hand side here. And so as we come into what's this. Is this bedroom two?

This is bedroom one, the main bedroom.

Okay.

And the plaster work. This was probably the worst room in the house. And it looked like the noggins were actually coming through the plaster.

It looked that bad?

I assume that was the laths that were coming through.

Yeah, yeah.

Okay.

And this, this bedroom was right where the stumps were really bad.

And was that your first experience with lathen plaster?

It was actually, yeah.

Now I've done plaster repair but lather and plaster, that's a different kettle of fish.

Yeah, yeah. So for those of you listening lather and plaster, you find it throughout Australia but it's basically hardwood slats that are nailed onto a timber frame. And then there's a coat of either sand and cement or sand and lime render that's put over the top of the larvs. And then there's a skim coat of plaster that's put over the top of that. And this was very popular kind of pre, you know, maybe 1930s before the fibrous plaster. Fibrous sheet plaster came in. So. And one of its characteristics is you get this crazy cracking that goes all the way up the walls and so on, which I imagine you probably had.

A bit of here it.

I've never seen anything like it.

And so you, you actually had you whole chunks of plaster that had fallen off and the laths were exposed and the frame was exposed behind the plaster.

Well, it was certainly bad when we bought the house, but when we lifted the house it ended up on the floor.

Yeah.

Because that's the other characteristic of lath and plaster. When you re stump it tends to crack all of the plaster. One good thing about, I think I actually shared this tip with you at the time when you were doing the Renault is with cracks with lath and plaster, if it is still solid on the laths, the actual plaster and it hasn't come away, you can actually rake out the cracks, clean them out with some water and then add some corner cement, a couple coats of corner cement, just scrape it off in between and then some top coat and sand it back. And that's really, really strong. In fact, often what you'll find and sometimes walls do crack again because you get some movement in the house or whatever. But the cracks will often appear in different parts. I've never seen it re. Crack on the cornicement. I think you used that technique on.

I did, yeah.

And the larger sections you. You would have had to what, put some sheets in there to do.

No, I was actually able to use that cornicement. It was very effective.

Great.

Very hard to sand, but very effective.

Yeah. So the cornice mat, you actually got to get your scraper like a broad knife and scrape that off. And then you. The top coat, you can sand back. Yeah, but it doesn't sand very well.

Yeah, no, it did look bad when we bought it. It looked worse when we lifted the house and then when we gouged it all out, it looked even worse again.

Yes. Yeah, yeah. The crazy path is running all the way up and. Yeah, and you gouge them out. Just the reason you do that is just to open the mouth of the crack. So the plaster will take. But you can do that with an old chisel or an old screwdriver or something like that. Okay, so that's good. And floor covering again? Same. Same floor covering across the hall.

Terylene curtains again, same blinds.

Same blinds. Okay. A bit of a repaint.

Although in this bedroom, because I lifted the house, I actually cracked one of the front windows. So we had to replace that.

Okay, and how much was that?

You remember we did a total of five windows or six windows for just on the $400. Yep.

Great. Alright, so back out into the hall.

This is the bathroom? Yeah, the main bathroom. We only have one bathroom.

Okay. We have the bathroom here. Not. What is it? Probably about two, two metres across. It's not a huge.

No, it's only a small bathroom. Quite a small shower too, but a normal sized bath and we had to repaint and I also did some plaster work and we had to put a fan in it. Never had a fan.

Okay. Never had an exhaust fan. So did that mean that there was some mould and so on?

There wasn't any sign of that, but I couldn't have it tenanted without a fan.

Yeah. Okay. And so pretty original then. You didn't retile, didn't.

No, we didn't have to. It was actually in the kitchen and the bathroom were quite good condition. So I think we're fairly lucky in that. That regard.

So they're probably. I mean just looking at it, it's probably What A maybe an 80s, 90s?

Yeah, I would say close to 80s.

Yeah, yeah, yeah. Renovation. So you didn't have to do much. So solid. Little bit dated, but solid. And for the budget you're. You're looking at, you didn't need to do anything.

Absolutely.

Yep, yep.

Okay, great. So we'll head back out. Okay. So as we come further down, we come out into the lounge room area. What did you do in here?

This plaster was extensively damaged. We had a few stump issues right under the wall here. And I think potential buyers were probably put off because the noggins looked like they were coming actually through the plaster. So it was fairly bad in here.

Yep. Now it's a lance again, poking through. Yep.

Yeah, yeah, yeah.

Same carpet.

Same carpet. Again, the builder's choice. We also restained the. The fireplace here in the corner. Yep. And we had a gas plumber come out and. And check that over for us.

Yep.

And is this the only heating in the house?

It is, actually. Yeah.

Yep, Yep. And so you re all obviously all this timber work and everything. You repainted doors and. And trims, skirting and architraves, that kind of thing.

Yeah.

We also did a window that was broken, and I found out that a couple of years prior to us buying it, a hailstone had actually gone through the window. And they taped a placemat out of the kitchen over the hole. So that did a good job for a couple of years.

And it looks great, a placemat taped to the window during an open for inspection, doesn't it? It's really.

Indeed.

Whole new angle on staging. Yep. All right, so that's the lounge room. And as we go down further, we come to the kitchen.

Now, there was only minor plaster work and I painted the walls and that was all I did in the. Oh, and there was a leaking taps, which I had to do a few washes as well.

And again, that's because it was renovated probably at the same. Actually looks a little bit more modern than the bathroom. So generally it does look a bit.

Modern, but, yeah, I'm led to believe probably at least 10 years.

Okay, well, that's.

But it was in quite good condition.

Yep. So there wasn't much to do here. Again, slightly dated, but for your needs and what you were trying to achieve, find to live as is.

Absolutely.

Yep. Great. Okay, what have we got next out into the. The laundry here. Much work on the laundry.

There was a little bit of tiling work and I resprayed the. The laundry trough. You can see it looks quite good.

It looks pretty good. Yeah, if he does say so himself. That's good, mate. All right, so last bedroom here is bedroom three, I'm guessing, which is right out the back onto the. Looking out onto the backyard here.

Now, this one had a little bit of water leakage from the roof, so I did have to repair the roof, and that was with a sheet of iron. And then we repaired the plasterwork, painted. We transferred the carpet from bedroom one to bedroom three because it was in good condition. And we replaced the terylene curtains.

Yep, yep.

Great. Alright, so and across from the bedroom here, we've just got the toilet, which is right out the back of the house.

Yeah, that was a new toilet seat, floor stain paint, and a new toilet roll holder.

Okay, so that's it. We're through all the rooms. Now. What are some of the other things that you did, like electrical, plumbing? Some of those. What were some of those?

Electrical I didn't have to touch, nor the plumbing. The only time I needed a plumber was to do the roofing. They replaced the colorbond roof on the top and everything else we did in house.

Great. Alright, well, I think we should find a nice comfortable place to park ourselves for a little while because I want to hear the backstory which led up to this first project.

Okay.

Seems like as nice a place as any. So, Russell, can you talk us through what led up to the first investment property? And why didn't you do it sooner?

For the last.

We've been married 26 years, I think, and we've talked about investing for 25 years and we do all the right things. We look, never commit, because once we get to that point, it's, well, what if something happens? What if you lose your job?

What if you run out of money?

Something goes wrong and you end up with nothing. Which is not the case. But we had every reason not to. So we were just handbraked and too scared. Do it. Yeah.

What were some of the fears? What were you worried about?

I think I worked too hard for what I have. And if something went wrong, we would lose everything, which is totally untrue. You probably sell up and cut a few losses.

But what kind of things could go wrong?

Didn't know. Absolutely didn't know. I was scared of the unknown. But now that we know, I don't know why I didn't do it 20 years ago. Absolutely.

Great. What changed? What got you to the tipping point where you went?

I mean, I said to my wife, like, at 49, 20 years to go, or nearly 20 years to go. If we don't do something now, it's too late. And I think maybe 49 was the age. I can't tell you what actually tipped me over the edge, but I said, enough's enough and we have to change and we're going to do it now.

That's great.

I think the thing that changed the most was education. Surround yourself by people in that business who can help you and then educate. That was the biggest factor. But I come to a point in life that I said, look, we're late 40s now and what is it, nearly 20 years before retirement and I don't want to work for somebody anymore. I want to do what I want. I want to have freedom and choices, like we either do it or we don't. So then we started to talk with people and then I just did this course and.

Let'S go back a step. The education process, where did that start and what were some of the first things that kind of.

Well, the friend I mentioned, he's got multiple properties and he said he had a broker and perhaps we should get in touch with her and just see what we could do, what we could borrow. And then she had a. A minor course or a small type course in her little program, which we thought, we'll get into that. And then she came along and said, I've got a friend who's also got another course because I mentioned to her there was a lady advertising and the course was thousands of dollars. And she said, well, hang on a minute, I know a course which is nearly a quarter of that price and so much more value. So I caught on there pretty quick. But even then I procrastinated and it was like on the death knot that I said, yeah, I'll do this. And lucky for Nadine, she knew Jane and I was able to get in. I actually found it relatively the process, quite easy, in actual fact, which was completely different to what I thought. I don't know what I was scared of before. And now we're ready to go again.

Great.

We're on fire.

That's great. So can we turn to the figures? You bought the property for $640,000. You bought under market. So at what point did you find out how much you'd made?

Well, I actually had it valued probably three or four weeks after. And I also had a quantity surveyor come through. But I was just interested because I thought from what we bought it like and what it is now, I just wanted to know myself. So we had it valued and shall I tell you that too.

Yeah.

No, they valued it just over 710,000.

710,000. That's great.

You'd be happy over 700. I was pretty, pretty excited with that.

Yeah. So you should be. So what does that make your total profit?

Well, I don't think we've got the total profit yet. Okay. Although we've spent 8,000 and there's also 30 odd thousand in stamp duty. But in the next. I don't have to do it now, but next year I can pull. It's got an ugly brick cladding over the weatherboard and the weatherboard's in really good condition underneath. So I would estimate maybe another 50 odd thousand once we take the cladding off and paint. But then we also have the tax benefits. I think this year we claim maybe 2,500 from the quantity surveyor for this year. So that comes off as well.

So $2,500 in depreciation. And then of course, you've got your rent. So how much are you getting in rent?

$450 per week.

Okay, great. How long did it take? I mean, what stage did you even have tenants go through there in order to get tenants in there on the 17th day?

Well, I actually finished the stumping and we were doing the plaster. So it was least six or seven days into the reno and it looked horrific inside. And we'd actually. We hadn't repaired the plaster, but we cleaned all the holes and it was ready to be repaired. So it really was in a state. And the amount of people out the front, I thought there was an auction next door or somewhere down the street. So I thought.

So you can see people gathering out.

The front and there was a lot of people.

And they're for an auction down the road, but they're there to inspect your house for.

Well, I didn't know that actually. We'd organised for an inspection for prospective tenants, but I didn't realise they were coming into our house until they came through the front door with the agent and I thought, oh, we're not going to get anyone here. And we actually had multiple people wanting to move in.

Wow.

Even in that state, halfway through the renovation.

Yeah.

So obviously you picked an area with some good demand. Were you aware of that?

It was one of our things was low vacancies.

Yeah.

That we needed.

Fantastic. Yeah, great. Tick, tick, tick.

All right.

That's brilliant, mate. Well, why don't we. I think we can mosey on now. We'll go back out the front and. And we'll finish up outside.

Okay, great.

Alright, Russell, so We're back out the front here. So you've done it. Now you're one down and keen to start the next one. For someone who's in your position, or in the same position you were, let's say, 18 months ago, what advice would you give to them?

I would certainly recommend getting educated. Far too easy to make mistakes. So if you can follow someone that's already done that type of work, that type of investment makes it a lot easier. And very important is a lot of research in finding that right area.

Great. Well, Russell, thanks so much for sharing your story with us on your Property Success podcast, and I wish you well on your next venture.

You're very welcome. Thanks, John.

John, that was truly wonderful. I'm so happy for them. What a fantastic result.

It's really great, isn't it?

Well, where do we start? There's just so much that we can all take away from this. Well, I guess let's start at the beginning. 25 years. 25 years. Thinking about starting to invest. I'm thinking about three frogs and a lily pad here.

Yeah.

So what was it? There was fear. And when you asked him what was your fear, he's like, didn't really know. I don't know. I don't know.

And I think we've all been there, haven't we? You have this fear and you haven't really taken the time to sit down and analyze it and be rational about what's going on there and what are the worst case scenarios. And when he did do that, a lot of those fears just dissolve for him.

And I think the thing is, to me, it comes back to understanding what the risks are. So for that worry of fears, you know, fear of losing your nest egg and fear of getting it wrong and buying the wrong property and being ripped off, and you can actually minimize the risks of all of those by, you know, researching and knowing how to buy the right property and doing, you know, building inspections beforehand and knowing what the cost is going to be. And, you know, you can actually protect yourself against each of these. And I think that was nice when he said, you know, it was the education, etc. That, that, that helped get over that fear. But you know what? I really loved the fact that he said, you know, they had looked in this area and Heather had found this property, and he turned up and he's like, what's going on? And he's like, I just had to go through an attitude readjustment.

I get the feeling there might have been more than one attitude readjustment in.

The past go, Heather. But you know what I love about this case study is that it's. There's not a massive six month project or a structural renovation that costs hundreds of thousands of dollars. This is a guy that can only get 16 days off work. You know, he spent $8,300. He's created value. He's got like, you know, why are people lining up outside my gate to come in to have a look at renting it? He's kept some renovation potential in the deal as well. He's got further uplift with the market and they, you know, together building the portfolio. So, you know, it's, it's the simple stuff that he did in those 16 days. You know, he painted he, you know, floor covering, changing the washers, changing the toilet roll holders. And you know, I think, you know, some of the things that I really liked. I got to ask you though.

Yeah.

This whole laundry, tub repainting.

Yeah, it didn't look that good.

Russell, I hope you're listening now.

It looked all right, mate. Looked all right. No, it's, it just, yeah, it's just like a met old laundry. It actually looked good. He's got the spray paint out and spray painted it. What's a spray can? Four bucks or something?

Yeah, that's exactly. But a lot of people think I gotta get in there, I've gotta rip stuff out. And it's like, I've got a small budget.

Well, that's what I like. That's what I really liked about it is he was so disciplined in that he had his budget, he had his timeframe. He just went through and did what needed to be done, not more than what needed to be done. So he didn't, you know, get into that trap of renovating to his own tastes and trying to make it, you know, doing everything that he'd like in his own house. And he just stuck to the numbers and made it work. And, you know, that's all you need to do.

And look, I mean, there were some obvious problems. Like obviously having the placemat over the hole in the window was an obvious fix. But things like, well, there's nothing really wrong with the gutters, they're just not clipped on. And after years of neglect, it's caused all these damp problems and it just reinforces how important maintenance is to your current portfolio as well.

But it was suitably, suitably crappy house, wasn't it? Like the, you know, John Hebbins in, in episode three talked about how seeing the potential that other people don't and I could imagine it when I was standing in there and you could see it. I mean, it's still got textured wallpaper. And again, like we said, it's not a perfect renovation, but the. It's got textured wallpaper and you can picture the plaster hanging off and the laths showing through the walls and stuff like that. And people would have walked in there and gone, oh, my God, I'm not touching this place. You know, but they were able to see through that and see the potential, that it had good bones and where they went.

Actually, what I really liked about this case study, the walkthrough the property, kind of looking at the different rooms and describing things, because that's almost like what people can use when they walk through a property and think about, you know, where's the opportunity, rather than being scared going, oh, wait a second. I heard Russell say that he dealt with this. And you know, I think the tradesman and you came out with that lath and plaster. Obviously they're going, oh, gosh, I should be taking tips on this. Giving everyone a101 patched a lot of.

Lath and plaster at the time. I can tell.

Well, you know, for those who are interested, you could probably re. Listen to this and do it, but paint by numbers. But yeah, look, I really love the practical tips that were shared throughout this. And I think, you know, it was a really great, great case study.

Yeah.

And if we've got all the pictures, actually, Jane, on the website, so if you want to have a look, we.

Can check out that laundry tub.

Yeah, actually, I'm not sure if I got a shot. I should have. If I knew you were going to be so interested in the laundry tub, I would have got a shot of it.

I never even thought of painting a laundry tub. Like, I was like, oh, okay, these are something I'm going to take notes on.

There's plenty of other pictures. Also got the. I've put the PDF there of the article when they're in Australian Property Investor magazine as well. So you can check that out@yourpropertysuccess.com au EP4. That's YourPropertySuccess.com EP4.

Actually, you know what might be another good article to put there on the website as well. In the August 2016 Australian Property Investor magazine, I shared a case study of just a recent little refresh renovation that I did of a property that I bought over 10 years ago. And you know, I think, you know what Russell talked about where, you know, he's still Got the capability to add maybe $50,000 in value by fixing the facade outside the property. He didn't do everything at once. And I knew when I bought this property at that time I couldn't afford to do the kitchen, but now I can and it was fine and it was workable for that period of time. So I've just recently gone back in and done a quick renovation. Spent $33,000 uplift in value of $100,000. So, you know, check out that article as well. We'll put that up there.

Yeah, yeah. It's money in the bank, isn't it? Yeah, that's good. I mean that's exactly what he did, wasn't it? He realized that he wasn't trying to be perfect. He realized that he had some constraints there around budget and also obviously didn't want to over capitalize. And he's only the time he had off work, but he just did what needed to be done and, and yeah, left the money. He can come back there and renovate it down the track and make some more money.

Well, that's just it. He made some money. So let's talk figures.

Yeah. Okay, so he purchased, as you remember, for 640 grand. And his stamp duty was 36,000. Renault cost 8,300. So I've got that at 684, 300. And then he had revalued a couple of weeks later at 710. So 25, 700, thereabouts. Let's say there's a little bit because the holding cost been so it was so short. So short of 16 day renovation. So let's say 25 grand in 16 days. So not bad going.

Not bad going. And what I love about this, we always say everyone says give me a rule of thumb, you know, and it's like, oh, cosmetic renovation, 10%. But it doesn't have to be 10%. The one in my case study in the API magazine definitely is not 10%. This is definitely not $64,000. No, you know, this is $8,300 and you know, an uplift in value of $25,000 in that period of time. Nice, nice. If you can get it. And he's getting good rent.

Yeah, that's right. I think he said 450 bucks a week. In fact, when I spoke to him recently, I think that rent's just gone up as well. And then he's got all his depreciation and so on there. So he's got some tax benefits there. So yeah, it won't be Too long until this creeps up and, you know, a couple of years down the track, this will creep up and become positive. And also he's obviously got the equity there that he can tap down the track as well.

Absolutely. So, you know, we started in the first couple of episodes and we talked about the fundamentals and the theory behind good property invest and best practices, et cetera. But today's case study, we've kind of seen the practical application and gained a lot of practical tips from it. But I think the most important thing that we can take away from today's episode is an appreciation of just how big a role mindset in creating the future you want for yourself and your family really plays.

Yeah, absolutely.

And you know, we heard it from Jan in episode two. It's not only deciding about, you know, being a gunna, gunna, gunna, it's about taking the action and, and the thing I love about Russell and Heather, they've gone, Gosh, we've got 20 years of work life ahead of us potentially. We've had 25 years of doing nothing. We're almost 50. We've got to do something. And it was almost like the fear of having nothing in the future was greater than the fear of what could happen wrong. That pushed them over the edge.

That's right. Hopefully for people that will listen to that and you can benefit from that, maybe that tipping point comes a bit sooner.

Absolutely. So, you know, I guess the really interesting thing is that, you know, that's how simple it can be if you just follow the no frills fundamentals. And Russell even had a few tips at the end of his sharing or his interview for people who are just starting out.

Yeah, his biggest tip was, you know, get educated. And, you know, we're pretty big on that round here. And second tip was find people that have done it before. And I know we do this too. Jane, we've got mentoring both, you know, professionally and in property investment too. But that's a super tip for just a short, you know, paid for a shortcut and I'm. I do that all over. Yeah, absolutely. And, yeah, and the last tip was just research, researching the, the right area and, you know, you can't argue with that.

Nope, you certainly can't. So a fantastic episode today. I hope you enjoyed it as much as I did. And now, I guess, John, this, this is the bit where you tell me it's that time again.

Yes, it is over to you, Mr. Blackman.

Yes, it's that time again where you get the chance to test Your suburb knowledge. While the entire nation holds its breath. Ladies and gentlemen, it's time to play Suburbs against the Clock. The rules are simple. To play, all you have to do is answer a question about 10 suburbs in the city of your choice. Within 20 seconds. The lucky winner of Suburbs against the Clock will win one year's free access to youo Property Success Club. Your Property Success Club is an in depth monthly masterclass which gives you the practical tools needed to grow your portfolio yourself without having to spend a fortune on expensive seminars or even leaving your own home. So who do we have standing by to play Suburbs against the Clock?

Virginia. Hello.

Hey.

Oh, thank God.

Virginia.

John's desperate to give this away. And I've got to say, I just looked over his shoulder and I saw the question. I don't think. I don't think you really want to answer it. Okay, so what is your.

What is your city?

Yeah, what's your city? Virginia, what's your city?

Sydney.

Sydney. Oh, well done. Okay, so have we got a question for you. So, Virginia, you're gonna have to come up with 10 Sydney suburbs in 20 seconds. The question for you is name 10 Sydney suburbs that have a lake.

That have a lake. A lake. Okay, I'm going lake or river?

Water.

Creek. Creek.

10 seconds.

What about things like Middle Harbour, Castle, Crag, any of that?

Oh, yeah, we'll take four. Keep on going. You've got 10 seconds.

Clontarf North Bridge. Oh, that was just me. That was mean. That was so mean. Give it to her. Give it to her. Oh, my gosh. You know what, Virginia? You did a few. Fabulous job. Fabulous. I would. I would have fallen over there. You definitely are getting. John, stop laughing. Your Property Success club membership for 12 months. And you're welcome on board. And once you get into that private Facebook page, you can come up with a question for John and we'll put it to him and.

Absolutely.

Payback. Payback. Payback. Well, thank you for being part of it. Such a good sport. So put your email in the. In the details and we'll get back to you.

So if you would like to be a contestant on Suburbs against the Clock.

You love this way too much.

Yeah, yeah. Simply email supportourpropertysuccess.com or if you have an idea. Yes, and we had a few come in, so that's good. So, yeah, plenty of new nasty little gnarly things to throw at you.

I did see one that someone said suburbs with dash. Dash. M. Dash. Dash. And I was thinking that it meant that M had to be the third letter in the suburb, which seems is way too cruel. Yeah, so we'll leave that one off, but please send us your suggestions. And if you're a property investor and would be willing to share your story with us, we would love to hear from you. Now, you don't have to be a student of your property success or the ultimate guide to renovation. Anyone is welcome. We think these stories can add a lot of value for people and we'd like to get them out there. So, as I mentioned before, if you'd like to see pictures from Russell's renovation.

Simply go to YourPropertySuccess.com EP and that's.

E for Echo, P for Papa, and the number four.

I had to think.

So that's it for today's episode and we have a great episode for you coming up when we interview Property Professor Peter Kulios. Peter is a brilliant author, property investor, property developer, and the national coordinator of Property investment training at TAFE South Australia. And what's great for us is that Peter is really on the cutting edge of the active property investment strategies such as developing to hold and creative deal making like options. Now, this is an interesting strategy, the poppy strategy.

I'm looking forward to that.

Yeah. So more fantastic ideas and information coming up for you in the next episode. So bye for now and as always, here's to your property success.

Ladies and gentlemen, it's important for you to understand that you need to take care in applying what you've heard on this podcast to your own personal circumstances. Everyone's situation is different and while we go to great lengths to ensure that everything we share is accurate, the information in today's podcast was based on personal experiences and opinions and is not intended to be specific to your circumstances. We are not real estate agents, financial planners, lawyers or accountants and are not liable for any loss, damage or misunderstanding caused by reliance on any information provided or inferred. We highly recommend you seek out the services of a professional or mentor to help chart your own path to property success. Your thoughts, John?

Spot on. Spot on. I reckon. Well done, mate.

Did I put enough emphasis on take care?

Yeah, yeah, I think so.

Okay. You sure? Yeah, I just want them to know that we really care.

Yeah, I think they'll get that.

Mmm.

Good.