Ep 126 One Property 3 Renovators... What would they do? - Jane Slack-Smith, Michelle Lewis, Terry Reese

It's time to get your property news, tips and tricks from a different pro every week. I'm Todd Sloan and you're listening to Pizza and Property. Hello. Hello and welcome back to another episode of Pizza and Property. My name is Todd Sloan and today we have got another panel episode for you guys only because the last one just was received incredibly well. So I've been putting on my thinking cap and we've got a few more coming up, but we're going to sort of stretch this over a little bit of time. But today we're going to be talking Renault panel, going to be talking with three very successful renovators at three different stages of their journey. And they. I very purposely picked these guys because they're not three in the same. And we are not, as you're about to find out, get three in the same answers, which to me is the whole purpose of these panels. It's really about showing people there is so many different ways to actually walk that path to success or different paths to success. I think I might have just said the same thing twice. But today we're going to be talking with Jane Slacksmith, Michelle Lewis and Terry Reese. All three have been on the show before. All three are very experienced renovators, and all three know how to make a lot of money when it comes to renovating property. Which is exactly why you're listening today, because there might be one in particular that really resonates with you. Like maybe like Michelle Lewis, she is known for being the absolute budget queen. Her ROIs are out of this world. And like, rewind back a few episodes. When Michelle was on the show, what was, I think backed away back all the way to episode 66 and 82.5% ROI. And just in case, if you're new to property investing, you're like, oh, yeah, it sounds like a bit. That is insane. Most of the time you're happy with like 20, 30% and even some people are taking 10%. So 82 is just ridiculous. And again, why we've got Michelle on the show because she has a very unique perspective on how she achieves such kinds of crazy returns sometimes in the market. Jane Slack Smith. Now, this woman is an absolute property machine. She's a systemized taskmaster that brings efficiency and speed to all of her projects. Seriously, I don't know how she does what she does because she runs a successful mortgage broking business. She renovates property. She teaches people on this. Like, I do a lot of things, but I look at Jane, I'm like, I'M not even doing 10% of what you're doing. You are insanely, like efficient. And I mean, I mean that in all due respect is crazy. What this woman achieves and the way that she brings those kinds of skill sets of balancing time, budget, everything that you need to balance in a project, it really comes down to the numbers and data today. So for Jane, I'm expecting a very analytical response. And then Terry Reese. Now, Terry Reese is no stranger to the show he's been on before. We actually started talking to him partway through one of his rental projects, I think a couple of years back. Terry has built up a multimillion dollar portfolio. I think it was his late twenties. He actually got to multi millions. I might be wrong there, just in case, but the guy has done some amazing stuff and one of his big things, he loves turning three and ones into four and twos. I'm expecting Terry to talk something along these lines with this property today. But Terry is very much a get your hands dirty. He's an ex sparky. He wants to get in, get it done. Still, obviously systems balancing budgets, things like that. But if you put Jane and Terry on a work site together, they would incredibly different ways of doing it, which is the whole point of this episode. And the thing that's going to make it even more fun is I want you guys actually to go over to Facebook, okay, and type in pizza and property. Go to the Facebook page. There's going to be a little like a tab that you can download so you can actually see the exact Renault pack that they have been sent. Now, more than likely, I might actually update this just a touch because the market is moving so fast. This was sent out to them at the start of the. Well, not the start of the year. I think it was like maybe early February, I think I actually put this together and we're in. What is it now, like mid March? Normal, stable markets, doesn't matter. Market moving this quickly, it can actually make a difference. So if there's any sales in there that are updated that our Renault panel hasn't seen, I'm going to make it very clear that they weren't available at the time of them doing their numbers, but otherwise it has everything that you're going to need. It's got all the information on the property. So the property that they are all doing the Renault on today is settled on the 21st of January 2022. It was built in 1983. Internal square meterage is 138 square meters. Purchase price $580,000. It's got roof tiles, a trussed roof, three bedrooms, one bathroom. And this property has been given the clean bill of health structurally. And it's in the suburb of Hallett Cove, which we've also provided all market data on this one. And again, everyone's got the same stuff. So you can see your median house prices, your growth and a whole lot of sales within a 1km radius because some of these spill into the next suburb over. But again, I'm wanting you guys to see the contrast of this. It's all been ordered from least expensive to most expensive, both 3 bed 1 baths and 4 bed 2 baths as well. So again, you can see that sort of bottom end and the top end of the market and then at the end of it, there's the fees, though. We're going to be asking all of our guests on the Renault panel today three main questions. What would you do to the property to add value? How much would you spend? And what do your final numbers look like? Have fun with this one at home. Listen to what they're saying. But I am so interested to hear, I want to, I want to see the comments below on this. What would you do? How much would you spend? What would you actually change about the house? If you're looking at renovating, as we always say, this is not financial advice, please seek independent professional financial advice. But this is seriously going to help. Not only are you going to be able to have like a live bounce off of like, wow, this is what three incredibly successful renovators from Australia would actually do to the property. You're then going to be able to see the exact same data, the exact same everything and give it your spin. But that's enough for me. Let's jump on the phone to the first guest that we've got on the panel, Jane Slack Smith, and see what is she doing to the Hallett Cove house that's cost $580,000. But just before we do, quick word from our sponsor. Getting property number one under your belt is an amazing achievement. If you're looking to get help from a buyer's agency driven by data to arrive at results that could help you expand your portfolio, reach out to the buyer's agency that supports us here at the show investikit.com There's a reason Investigate is growing so fast and why we're so happy to have them as a sponsor. You don't make the choice between capital growth or cash flow. Chat with the agency today that's actually achieving both for their clients. Jump on the phone. Check them out today. Investakit.com Jane Slack Smith how you going?

I'm good, thanks, Todd. And yourself?

Yeah, very good. Thank you. I'm really looking forward to having your opinions on this because this is a very different episode. We've done one panel episode before, but this is our very first renovation panel episode. And I don't know if this is going to be amazing or what we're going to uncover, but I'm scared. Well, I just think it's the unknown, but that's the exciting thing. And I wanted to understand a little bit more about your thoughts before we open up the questions of what would you do? How much would you spend? What would your final numbers be? Was there anything that you wanted to add onto this house and how it code before we start?

I guess the thing is, I mean, you know, being a terrible preparer, I got the pack an hour ago and I thought, all right, I'm going to go and have a look at all of this. And I was like, up to page 1415. I was like, wow, there's so much information here, which is great because I love the information. But I guess, you know, for the listeners is trying to just understand the methodology that I go through when I'm looking at renovation potential of the hour that I had to look at the information. I spent about 45 minutes on the suburb analysis and comparable sales and then spent about 10 minutes on the renovation. So you can tell from that where my priority is is actually getting the right location. And that all comes down to pricing disparity. So trying to prove that there is enough pricing disparity within the suburb and then within the properties for the comparable sales to actually justify renovation.

Perfect. I love this. And this is like you said a million times before, just because something can be renovated doesn't mean it needs to be renovated or can be renovated profitably. So with that in mind, Jane, what would you actually want to do to the property to add value?

Look, if I took the property in isolation and completely disregarded the location, comparable sales and I just looked at the property, which is what a lot of people do. They walk in the front door or they look at the pictures online or they look at a floor plan, they go, what can I do now? I could go full on slum lord on this and, you know, turn the formal lounge into a, you know, TV media third space from work, work from home area. I could punch out a wall at the back and, you know, make it into, say, a fourth bedroom or extend the third bedroom and Give it an ensuite. You know, I can reconfigure the entire floor plan. And I think that where a lot of people go, you know, they look at, you know, what could this be? You know, it's an ugly kitchen. I need to make it a nice kitchen. Oh, my gosh, the tiles in the bathroom are horrendous. You know, what can I do? Let's rip it out and start again. And, you know, if you start with the property and what's wrong with the property rather than where it sits at the 10,000 Foot View, you just can lose money.

Okay, so you're sounding like you're not doing much to the property then.

I'm not doing much to this property. In actual fact, I'm wondering why I bought this property, to be honest.

Really? Okay, so this isn't ticking the boxes for a Jane Slacksmith renovation.

No. So, you know, I'm always trying to understand the strategy. So if I'm going to, and I'm not a flip person, I don't flip properties. You know, there's a, you know, bound of error and issues and people can lose a lot of money. But in a rising market, which is what we've got in Hallett Cove in South Australia, right, You know, there's a lot of attention there. The market's moving and, you know, it's almost like finally, you know, let's capitalize on a bit of activity. You know, in a rising market, it can hide a bad flip because it's the growth that gets you there.

Right.

So if I was looking at a flip, you know, you want to cover stamp duty. So this property is bought for 580. So I've got like 25 grand stamp duty, let's call it 2% selling cost. So, you know, I'm already in about 45 grand. And, you know, a typical kind of cosmetic renovation we say is about 10%. So that's about 60 grand. Now, 60 grand is actually going to get you a structural renovation with this property. But I'm always trying to make at least a dollar for every dollar that I spent, So I want two for one. So if I'm going to spend, let's say 30, 40 grand, I want to have the evidence of the 30 or 40 grand on top of that. And if I'm flipping, I need more than that. That's just for a cosmetic renovation. So I'm going to need a whole lot more than that. And so if I look at this property and go 580 and throw on buying and selling Costs that gets me 620 just to kind of COVID some expenses, let alone holding expenses for whatever the renovations are that I'm doing. So there's not a lot of profit. So I'm looking, you know, 700 up just to justify comparable sales to justify a flip. Now, the good thing about this suburb according to the 2016 census, so we're still waiting for the latest census data, is that this is an owner occupied suburban. So there's only 15% renters. And if you're going to flip, you're going to flip in an area where there's people who just fall in love with the property and they want that property as their own. So, you know, I look at this suburb and I look at it and go, okay, I need to then prove that there is properties 700,000 and above. So if I go to the data pack that you gave us, I don't want to compare the neighboring suburbs. So I get rid of all of those. I see that the neighboring suburb has a median price lower than Hallett Cove. So it's immediately not a comparable look. This big freeway in the middle of it, et cetera, et cetera. I love the fact that there's a quarry within the area. Having been like quarry services, technical services manager for South Australia, I've pretty much designed blasts in that quarry. So I kind of like the area, but for another perspective. But you know, so I'm looking at that from a flip and I'm like, gosh, it really has to stack up. So I start looking at the numbers. Now the only Hallett Cove properties that I'm looking at, I'm just going to pull them up that we had there. We had a 560 that was. So it's $20,000 less than the one we're looking at. The property that we've got. Looking at, it's got a 597 meter square meter block with about 140 living space. This one had a 690 square meter block. So an extra 100 meters squared for 20 grand less. Plus it's got this beautiful brand new kitchen, air conditioning, you know, it's old bathroom, etc. So I'm like, oh, that, that's not really comparable that I'd like to include. So let's just go on to the next ones. Okay, so then go on to seven Caswell drove. It's $645,000. So it's getting up there. If I was going to try to, you know, if I was going to do like a fifteen, twenty Thousand dollar cosmetic uplift. Then, you know, let's say twenty grand added on to my six hundred and I want to make two dollars for every one dollar. So around about that six hundred twenty up. So I'm around six hundred and forty five. That's great. I look at this, it's got views, which I understand from your market intelligence that doesn't necessarily mean that you're going to get a million dollars more. So you know, there's views but there's a pool and you look at pools and pools cost like 40, 50 grand to put in. So they've already put like a 40, 50 grand pool in. So I take that off my 645 and I'm down around 600. So I'm like, oh, that doesn't really work for me. And then I look at 10 Freer Street. Now it's got two bathrooms, it's got an ensuite. This one doesn't. Much bigger house, 177 square meters, you know, and it's pushed the floor plan right to the edge of what that property is doing and get that for 640. So I'm looking at these recent sales going, is there really a flip there now if there has been a market move and we know that markets can move really quickly when they do move and we start looking at, you know, the 700,000 plus and multiple properties like.

That, like not just the standout.

Yeah, there's one property there that's worth over 700,000 in that Howard Cove area. And if I have a look at it, it's that Barramundi, it's got a pool as well. And it sold for like 900. And was that 900?

Yeah, that was 900. And just in case, if you guys haven't downloaded the packet as well, get on over to the Pizza property Facebook page so you can follow along with what Jane's saying here. Because 91 barramundi, like that, that was a stunning looking property. That was finished very nicely. That's. Yeah, probably not quite what, what anyone's going to take it to as far as the Renault is concerned.

Like comparables, like if you're going to spend another, you know, if you bought this for 580 to get up to a $900,000 property, you've got a big budget, you know, we could almost knock down and do something amazing. Right. So, but that's. That was a newer property, 20 years newer, you know, and had a lot of lovely features to it. So I'm looking at this from a Flipping point of view going okay, so I'm not going to spend a lot of money on this because it's not a flip. And so I step back and go well what's the other strategy I could do? As I said, the slumlord cash flow. You know, let's make it into a six bedroom kind of property. Everyone has a tiny little dining room that they have a communal area but there's not a lot. Based on the 2016 census there's still only like 15% renters there. So I'm like well maybe the rental demand has changed. So I jumped over to Suburb View and I had a look and in the last three months there's been 22 three bedroom properties that have rented but at the moment there's only two on the market. So that indicates to me that they do rent quickly and that the vacancy rate's like 0.2% according to SQM research. So there might be some, some rental demand there but it's not something, it's something that's quite new and I as a kind of, you know, I'm going to call it low risk but really it's a scaredy cat invest. I just want to protect my money and put my money where I'm going to get the most value. And that's not, you know, hope and dream that I picked this right. You know, I'd wait for maybe the census data to come out and I've had had a look at the suburb trends inventory and it indicates that you know, there' about 180 properties sold a year. There's about 16amonth that are sold. And you know, you look at those, they're mostly three bedrooms. So I'm like well a higher and better, you know, property that is generating more money selling is a four bedroom. So it's not the typical property as per the data that we have in 2016. And so I looked at the properties that we're selling and there was only like five four bedrooms that had sold. Now is that because they're not on the market and they're not available? If I make a four bedroom property all of a sudden everyone wants to rent it or buy it. But once again it's like a hope and a dream rather than a proven formula. So as I said, I spent most of the time looking at the data pack going what would be the strategy? So if I did a buy reno hold, this didn't really lend itself to actually doing a structural renovation outside the current floor plan or footprint of the property. If you went up. It'd be nice to think that you could get views because there is some sea out there but it doesn't seem that it adds value. And I can't see any other two story properties looking at Google streets going around the Google maps as well. So that doesn't justify it. I look at the current floor plan and look at the cosmetic renovation opportunity and I can see that you know, based on the current data, you know three bedrooms are what people are after. They like an ensuite. Everything seems to have an en suite except this one. And I can see looking at the floor plan that it is possible to potentially close off that third bedroom at the back on the right hand side from memory from the kitchen and put a door across, you know, where the bathroom is and actually close that off and have that as an access like the parents retreat from the back. So they're in a separate zone and have their own kind kind of area. So I can see that that could be possible with an ensuite and you know, ensuite eight to $10,000, a few little restructuring of the walls, et cetera, you know, four or $5,000, you could probably do that, you know, for less than 15 grand. The kitchen, I'm looking at all the kitchens that selling and other than the one that sold less than this property, they're all you know, a bit daggy. So you know I'd probably spend a thousand dollars on painting the bench tops and replacing the doors and the thing property is the lights. So you know, even for less than $500 with an electrician included, you know, maybe putting some oyster lights in, I don't think it deserves down lights. I can't see anything in comparable sales to saying that is what it would meet the market. So you know, if I wasn't going to do the full three bedroom ensuite niceness, I'd probably spend about two grand on it because you know, to rent it out there's not a lot of disparity between the rental properties that I looked at. That's going to make me a 450 versus a 400 to $500 a week change.

So A, so why spend the money?

I wouldn't have bought it as a flip, B I wouldn't have bought it as a buy Renault and C as a slum. Lord, I can't prove that there's like six people who want to cohabit in that area either and it's at the back end of the suburb. And just looking at the SA1 differentials within the subur, not in, you know, the SA1 differentials is about 27 segments in that suburb and this is up around the 20 mark. So it's not in the high price range medium for that suburb either.

So.

Yeah.

Do you actually mind sending that link through as well Jane? Because do you mind if I make that public to share that? Because that was brilliant. When Jane showed me this before I was just like, I'd never seen that before. So that must be something that's going to help a lot of people. But so wrapping everything up, basically we're looking at. You wouldn't buy the property to flip? Well, not, not at the 580 at least for the sale price. You wouldn't buy the property to rent out as far as a room share and you wouldn't buy the property to just do a quick cosmetic tart up and rent out either. It's. This isn't ticking any of the Jane Slacksmith boxes.

I could spend 580 a whole different areas and make a whole lot more money.

Okay, out of interest, what, what would you purchase it for?

If I'm looking at, I mean what, what really hurts is that three weeks earlier a property sold for 20 grand less that had had like a 15, 20 thousand dollars Renault done on the kitchen. Right. So you know, I'd have to be buying around that 480, 500 price point.

So almost 100 grand below. Okay.

Yeah. To actually justify, you know, doing like a full on improvement and like I'd love to get in there and I'd move the, I turn the, the archways into, you know, square walls, potentially put on, you know, doors out to the back where that lounge area is. Personally, if I was going to rent it, I'd get rid of, rid of the combustion stove out the back. It's just fraught with issues for renters and liability, etc. I think, you know, it'd be nice to get rid of the slate but you don't need to waste your money on that. It looks like it's been painted. The, the carpets look nice. You know, there's not a lot to do to the property itself. Like you could do a lot to it but you wouldn't be getting any of your money back. So you know, I think you could spend your money in a whole lot different places. It might be a nice, you know, it's only what, 18ks CBD. I was going to say holiday house. People in the city. I don't know. But you know, it doesn't. Properties within that area and because there's not that huge disparity for the properties with ocean views that you could probably spend, you know, I don't know, 650, 700, and get better views and a property that, you know, you could actually do more with.

I love it. Whilst it is absolutely not the answer I was expecting to get out of you today, Jane, if this is the truth, I love it. And I think this is something that's going to make people think long and hard as well, because we're getting three different views from this. This exact same property. And I'll be really interested to see what everyone's is in contrast. But Jane Slacksmith, thank you so much for your time. I really appreciate you jumping back on the show.

It was lovely being here. Thank you. Wow.

Things have not started the way I thought they would. She is not touching this place. The thing that I love about the Jane's approach with this, though, is she doesn't just say, like, oh, no, I wouldn't do that. It's, well, here's why, and here's what I would look for. And I'm really hoping this doesn't happen with the next two. This is going to be a weird episode. But I do like a lot of the points that she's making because, I mean, this is the whole thing with the way that Jane actually looks at it. It has to make sense in the numbers first. Listen to the research that she actually put into it. It was a couple of minutes on the fees, though. The rest of everything else was talking about the data, talking about the market, doing extra research above and beyond. That's really where all of her oomph went into this. Because as something that Jane and I have talked about on the past, on the show and off air as well, is the amount of people that get caught up sometimes, especially in a booming market, like, please be careful of this and think they've just made a lot of money when they're renovating. Then I remember a story Jane told me about some people wanting to quit their jobs. And then all of a sudden it was like. I remember her saying, look, can you actually just show me the numbers? And she basically broke it down and said, hey, guys, you didn't actually make any money off that renovation. You actually just made money on capital growth. And these people were about to quit their jobs when the market had then softened and gone back to more of a stable market, they would have ended up losing so much money. So, like Jane was saying, so her take on this one, she probably would have had to get that in the higher fours for that to actually make sense. And this is for what she wants to do. So obviously there is more than one way to skin a cat, and we're about to find that out as well. By now, talking with Michelle Lewis and finding out, I really hope she doesn't say the same thing. What would she do with this property as far as the Renault project's concerned? Let's jump into the interview with Michelle right now. Michelle Lewis. It's been too long. How you going?

Hey, Todd. I'm really good. How are you?

Yeah, good, good. Good to see you. Got the black T shirt memo as well. We're matching.

I know, it's exciting.

I'm really excited to have you on this panel because I think that you, as an accomplished renovator yourself, you've flipped lots of projects before, but the thing that I always admired about the way that you do it is you do it on such a budget, which I think makes it accessible for so many different people. But before we jump in, what you would have done on the Hallett Cove house, is there anything that you wanted to kind of add into this before we started pulling apart your point of view on it?

Yeah, absolutely. So my bread and butter is the budget Renault, which is ultimately what I came back to with this project. But I also saw lots of potential for the homeowner. So the homeowner that's purchasing the property can onsell the potential. And so I looked at adding a second bathroom and making the carport into a bedroom. But then ultimately, to make the profit, I bought it back to the budget Renault.

Okay, all right, well, why don't we jump into it then? So what would you do with the property to add value?

Yeah. So I worked out that my biggest spend would have been on the kitchen. And of course, that's my 1k secondhand kitchen muff Gumtree or Marketplace. About another K for a brand new bench top. I go with the gloss laminate to make a Caesarstone look. So obviously a lot cheaper than Caesar stone itself. And then your cost to have it fitted into the kitchen. The other things I had to really pare the budget back to make this project work. So keeping all the current floorings except removing the brown carpet in one of the bedrooms and trying to match it with the other grayer carpets doesn't have to be perfect. Again, secondhand Gumtree Facebook Marketplace. I looked at changing all the light fittings because they can really give you the wow factor. And yeah, those are the sorts of things that I looked at for this property.

Okay. And so when you talk about like the, the kitchen and getting that for around that thousand dollars, how, how consistently can you actually do that? And you've lived in like several places in Australia as well. It's not like you're just in Adelaide.

Every day of the week. There's a thousand dollar kitchen online every day of the week. So you just need to look and. Okay, maybe not every day of the week, but they're there. They're definitely there. Yes. Very common. And everything else is common as well. You just have to look for it. Yeah. And know how to look for it. There's some special ways you can look for things.

Okay.

And as far as actually getting someone to put it in as well. So you put that into the budget. This isn't you rolling up your sleeves and going, all right, let's do the installation.

No. So sometimes we might put the carcasses in place and then we get a cabinet maker in to secure the kitchen into the kitchen and fit the bench top and also the sink if required. Again, sink, taps, appliances, all secondhand where possible. Okay.

And is there any kind of a standout piece that you've done with this or. This isn't about the wow. This is about basically just really bringing it up to a. Okay, this is nice. And we can sort of meet our margins.

Yeah. So what you want to do is create a home that people come in and go, oh, I don't have to do anything with this. I can live in this house as it is. It's a clean, neat, tidy house. I've got a white kitchen. Yes. It might be 10, 15 years old, but it's much better than the 70s or the 60s kitchen that was already there. And so you're adding that value on a budget. So it's creating that illusion of what's possible.

Gotcha. Okay. Is there anything else that you wanted to talk about, what you would do before we actually jump into the. How much it's all cost?

Yeah, absolutely. So I thought pretty key was actually rendering just the front facade of the house. So the Budget Renault is always about paring back so you can render the whole home. But of course, the Budget Renault says you just do the front facade. So I thought that was something that was quite important. And other than that, in the bathroom, tiling straight on top of the tiles and actually tile painting the walls, which is a Budget Renault strategy. It's not a long term, your forever home strategy, but it is a way of bringing a house up to a standard that Increases the value for the next next own homeowner who might actually rip all that out anyway and do their own modern take on a bathroom. So it's about creating that vision of a home easy.

And can I just jump in with something as well that I'm positive Michelle will echo is make sure when you're doing your tile paint in wet areas as well, don't just kind of do that. Right. That has to be done. Right. Otherwise that will be coming off in like half a week and you'll be pulling your hair out.

Yeah. So I generally get a painter to use the White Night three steps, step process with the epoxy and that's key. And they're more experienced in that sort of thing. So the alternative to that is paying someone to spray your tub, which obviously is a. It's a better, longer lasting effect. But the White Night products and others similar will do the job for now.

Fantastic. And rendering the front as well. So what are we looking at? Cost wise, I'd imagine that's going to be a huge cost saving. Just doing the front of post, the entire house.

Yeah, look, I sort of pulled out a figure of around $1,000 that might be possibly a little under what it might cost. But when you look at the front of the home, there isn't a great deal to it. There's not too many full walls. So there's actually a couple of ways you can render. You can actually do a full render or you can do a bag and cement render. So there are a couple of budget strategies around that. And there's also some paints that you can buy or products you can buy that you can actually sort of roll on that have a bit of T texture as another budget strategy for just improving that front and taking away that yellow brick. Look, if you're wanting to modernize that surface and of course even cheaper than that is just painting it. But yeah.

Would you ever just paint the bricks or you're not a fan of that?

Oh, I'm very loath to paint bricks because as soon as you paint, you have to continue to paint. And I guess the same could be argued for render, which may crack over time. But I try and love and respect the bricks and the budget. Renault says leave it as it is.

Okay, fair enough. Well, speaking of the budget, then, how much would you be spending all up? What do the figures look like?

Yeah, so I've got here on my list, I got the budget down to about $13,150. And I play. Yeah, I played with that a bit but that will obviously mean landscaping you do yourself, plants free off gumtree, everything secondhand where possible. Doing the bare minimum for this project, I did look at changing that lounge room into a bedroom and that would, you know, I said about $1,000 to make that archway into either a double door or a single door. And I did actually also add $2,000 contingency in this particular budget as well. So I really did pare it back. The key to renovating for profit is by what you don't. So everyone can spend loads of money and make it look amazing. It's about making it look amazing by not spending too much. And there's a real skill to that.

Absolutely. So in that 13,150 there's still two grand contingency?

Yeah, I think so. Something like that.

Incredible.

Yeah.

Oh, sorry, you go, what were you going to say?

No, no, you go.

I was just going to say what kind of a time frame you're doing this in. Obviously if you're going to be pulling up your sleeves on a bit on the garden and a few other other parts of the home, are we talking like sort of three, four months or how long?

So we've done it in eight weeks and that's. Yeah, that's. We've done a couple of Renaults in eight weeks and probably our longest has been four months. That might be like the full like sturt took us three to four months, but you can definitely do it in eight weeks if you're organized. You see the beautiful thing about secondhand products, they're instantly ready, they're already made for you. You just have to shift them from one place to the other. In this particular budget, of course, any of the non trade work we're doing ourselves, we're picking up the kitchen and that sort of thing. So yeah, that's how you make it happen.

That is incredible. And what do your final numbers look like as far as your return on investments? How much money? What are we talking?

Yeah, so basically I looked at the Renault cost at about 13,000. The purchase cost was 605 plus about 25k stamp duty and 3k in there. I've written for sales, sales costs and then so it comes out to about six hundred and twenty one thousand. I put the estimated selling price conservatively around six hundred eighty thousand as a basic. But obviously if I can make it look amazing and add lots of plants in to style it and make it beautiful, I would want more than that. But I came out with a profit of $58,850 and that worked out to be a gross profit of 8.65% on this particular deal.

And 8.65%. That's still 8.65%. And that's in eight weeks.

Yeah, yeah, in eight weeks. So, yeah, I hope that my numbers should be roughly okay. But yeah, I can definitely speak to the budget Renault side of things. You can definitely do it on a budget when push comes to shove and you might get stuck with a property that you thought would sell for more than it would, you just have to curl back that budget. So, like, for example, originally I had two grand for starting. I pulled that back to doing it ourselves and spending 500 bucks with stuff off Gumtree.

Yeah, brilliant. And also, like, so you'd be selling the property yourself as well. And I know, like, as an agent, obviously there's things that I would think about that, but this isn't about me. This is about how you would do things and potentially helping everyone else out. So why, why sell it yourself? Is it just the savings?

Yeah, look, I've obviously used agents and I've sold properties ourselves. What motivated me to sell myself is I love the selling process. I love working with people. And we sold a development site in Queensland once and literally it sold a day after we'd put it on. And I was like, oh, you know, maybe I can do that. And so when we sold a property next in Adelaide, Yes, I have done it a couple of times and I love the process, so. Yes, it does. Yeah.

Okay. Well. And I got to say, it's one of those things that I think people always expect me to go, renat, you should never do that. It's terrible. Always have an agent. And there's certain people that I would absolutely say that for. But for Michelle, obviously, if this is something that you love, you've obviously got experience in styling, in marketing, in sales and talking to people. Don't discount it. Maybe it's worth looking into, but it's not a one size fits all strategy, I wouldn't think.

Yeah, no, I completely agree with you. I think some people wouldn't ever consider it and others wouldn't be particularly experienced. And I think the negotiating is obviously a key part of the process. And I have spent time with mentors learning that side of things. So it's not something I went, I'm going to choose just sell a house one day. I have studied that in my own way and learned my own way of doing that. But I have huge respect for agents and so it's very important not to discount the value of a really good agent. And an example I'll give very quickly, we were selling interstate. Fantastic agent put lights up for us and sounds and checked on the property. We couldn't do that. We weren't there. So he was fabulous.

And speaking of like returns and what you're talking about now as well, made $58,000. I'm just quickly crunching some numbers over what does that actually come out to. $7,250 a week. So just in case anyone's like listening thinking, oh, it's only $58,000 or 8.65% return, I'd be pretty cool with paycheck of seven and a half thousand dollars a week almost, when you actually look at the velocity is pretty amazing.

Exactly. I mean, obviously that's a very intense eight weeks, but that's a lot of people's yearly wage, so it shouldn't be discounted. Yeah, absolutely.

100%. Beautiful. Well, Michelle Lewis, is there anything that you would like to wrap up before we actually part ways on this renovation panel today?

Well, just look, thank you for having me. If all else fails, turn to the budget. Renault turn to secondhand goods. It's great for the planet. They're out there, they're easy to find. You just have to have some motivation to go and get it. And it's fun meeting other people on the journey. So, yeah, just give it a go.

Love it. Thank you so much for your time, Michelle. It's all be chatting again soon.

My pleasure. Bye, Charles.

Now that is some serious budget control. Like the whole thing for like 13 grand. That's insane. I, I've just completed a unit for something like 20 and, and that was doing the, the whole lot. But like $13,000 on a whole house and that kind of timeline. And like, I understand Michelle is doing a lot of the work herself and, and just a preference as well, what we're talking about before with selling, like, obviously I'm a sales agent, so naturally I'm biased on this one, but in all seriousness, if you've got the time, you've got the skill set, like you can actually do it. You're probably not going to think I'd say it, but yeah, you probably shouldn't write it off. Okay, maybe it is worth it. But the fact of the matter is most people don't have the time, the skill set, all of the rest of the things to actually have a successful sale. Because there's a big difference between saving money on commission and losing money because you've left so much on the table and you don't even know that you've left it on the table. Michelle is a very skilled woman and what she does and obviously so, because she's still making a very tidy profit out of a house that Jane wasn't even going to touch. This is the whole point of these episodes because is Jane wrong, is Michelle wrong? No, neither of them. It's not about being wrong or right in this sense. Because listen to Michelle's breakdown, it's like, yeah, actually that totally makes sense. Listen to Jane's breakdown, it's like, yeah, okay, I guess that makes sense too. This is about piecing together everything that other people are saying that you're looking at going, yeah, actually that, that's fits what I'm trying to do here. And maybe you're a little bit more of a Michelle, you're a little bit more hands on, you're super budget controller and you're great at like scoring bargains off of Facebook, Marketplace, Gumtree, things like that. Fantastic. Or maybe you're a little bit more like our next guest, Mr. Terry Reese. Without any further ado, let's find out what big Terry would do to the Hallett Cove house that he bought for 580,000. Terry Reese, how are you, mate?

I'm dangerously well, Todd Sloan, how are you?

Very good, thanks, mate. I'm really looking forward to your perspective on this because I think that we've got two opinions that we've already heard from that kind of very contrasting. And now listening to the third, I want to see the way that you do things. You and I have spoken a million times about. Renault's probably actually getting close to a million now. And I think that you're going to really offer something that is a little bit unique in this front. So if we can jump into it, mate, what are you doing with the.

Hallett Code house, with the hallowed Cove house? Look, I'm a, I'm a real lover of adding bedrooms and adding bathrooms as long as it makes sense. Obviously some areas don't lend themselves to having that done and you've got to do a lot of upfront work knowing what say a three bedroom, one bathroom is worth so you can buy it and then what it might be worth is a four bedroom, two bathroom when you either sell it or get it revalued and pull that equity out.

Can you open up a little bit of the upfront work? What do you mean by the it?

Oh, just, just knowing what you're. There's a big enough gap between what a three Bedroom, one bathroom in pretty poor condition because that's what you want. You don't want to be buying a pretty 3 and 1 and turning into a pretty 4 and 2. You want biggest bang for buck. The ugly ones sell for less. You buy what the cheapest you could possibly buy, a three and one that has the floor space available to be able to turn it into a 4 and 2. And then what a realistic idea of what a 4 and 2 might, might sell for with that amount of floor space. You've obviously got to keep in mind you can't just, you know, have a house with no living area. So you need to make sure you, you leave enough, enough of those sort of things, dining rooms, living areas that it's still reasonable for somebody to live in as a four and two.

All right, cool. So as, as long as it's got the, the footprint there and there's still enough room. Yeah. You're not, you're not cramping it in and making these little bedrooms of 2 x 2 square meters kind of thing?

No, no, no, not nothing sort of smaller than 3 by 3. I generally try to, try to keep to that. That's a pretty standard sort of size for a bedroom.

Okay, cool. So what are you doing to this house to add value then? Obviously we're adding a bedroom and adding a bathroom by the sounds of what you're saying.

Yeah. So look, the, the bathroom's sort of a weird, weird setup. It's one of those old through sort of bathrooms. So I'd probably turn that into a, a smallish ensuite. Obviously you know, you're not going to get a massive ensuite there, but a smallish ensuite and a smallish bathroom, but still completely serviceable. I'd find a way to get a bath in there. Probably two bath needs a bath. So yeah, do those up normally. On one of our other projects we did, we managed to get both done for around the nine and a half thousand. Nine and a half to $10,000.

Yeah.

Which I was pretty, pretty happy with. Floor to ceiling tiling. And one thing I'll probably talk about later is leaning on people you know, that have skills that you can mate rates in the carton of beer economy always works wonders. Sausage sizzle.

Okay, so you're really leaning on friends and trades that you've got sort of within your circle.

Well if you've got them, it can't hurt to reach out to them and say hey mate, can you at least give me some advice, teach me how to do this Even depending on what it is. Like obviously plumbing, gas, fitting, electrical, those sorts of things. Probably you're not, probably you are going to leave that to the professionals because it's, you know, you can really hurt yourself or somebody else doing them if you don't know what you're doing. But for things like painting, things like plastering, small amounts of plastering, big amounts of plastering, don't even think about it. But tiling and things like that, definitely, you know, have a go yourself. You know, you might get laughed at by a trading if you stuff it up and he has to come and fix it. But they all started out in exactly the same place you did.

And this is what you and I spoken about off air before as well. If you're going to give it a go, give it a go with the laundry splashback first. Something that if you do make a monster out of it, like it's, it's not the end of the world.

Yeah, exactly, exactly. And depending on your project, look, if you're in a multi million dollar house, you're probably going to need to get a tile to make sure those tiles are, you know, on point perfect, you know, but if, if you're in a, a little two bedroom unit, for instance, two bedroom townhouse, something, something small, you know, that entry level area, there's nothing to say. You can't, you know, stick a couple of tiles on the wall and they look like a sawtooth but nobody ever notices.

Okay.

All right.

So I'm just, just conscious of time that we've got on this one, Terry. So yeah, you turn it into a, a four bed, two bath, you're painting the place yourself or you paying someone to do it then.

Yeah, look, with things like that, I like to get a price for painting and then just sort of make a judgment call on it. All the different jobs are different. I think I've been on here before banging on about how much I dislike painting myself. But if I'm just not brilliant and if the, if the painting comes back at ten grand to paint the house and you can paint it for $1,000 with Paint Yourself and like I said, a barbecue out the back and a couple of beers with some mates who come and give you a hand and you can get it. Yeah, done for a thousand dollars, well that's a no brainer to me. As long as it's not going to delay the project by a significant amount where the cost outweighs a bit.

Okay. And how about flooring? You're doing much there?

Oh, we'll do we'll do some of those pretty floating floors. I think that slate's very, very 1980s chic. Reminds me of Nana and Pop's house as a kid. So I, I, it's, it brings back nostalgia, but it doesn't excite people when they come through and have a look. So I think we'll go over the top of the.

Okay, so we've got two new bathrooms, we've got new flooring, everything's getting painted. Kitchen wise, are you putting it brand new or are you going secondhand?

Okay, so, so for the kitchen look, I would try to go secondhand. I'd probably have a look on, on Gumtree Facebook Marketplace. I did that the other day. I'm not in the middle of a rental at the moment, so I haven't been keeping my eye on it, but there's some, some beautiful kitchens for around that, you know, anywhere from $500 through to, you know, two grand. So you pick up one for around the thousand dollar mark, you know, spend a bit of money having, you know, know, water, plumbing work done, you probably get, get out of it for two grand. One thing I did sort of want to bring up was having, having a real good idea of what your measurements are. So there's no point buying a kitchen that's half as big again as space you've got. So. Okay, I always, I always like to turn up on building a pesto with a tape measurement and a notepad and just start measuring things and things that you're not going to necessarily even think about. You know, widths of where a vanity might go, where a bath might go. You know, the size of tiles are already there because it's always nice to get tiles that someone line up on the, on the floor measuring how big.

Your windows are so you can get all your blinds and curtains sorted.

Yeah, yeah, 100%. But, but then once you've got all those measurements, you sit there and you, you go back to Facebook Marketplace or Gumtree and save searches for, for all the things you want. And every time something pops up here, you give them a call and see if they see, you know, whether it's going to fit. And so you can buy with confidence knowing that you actually have a use for it instead of just hoping.

I like that. Save search for that. All right, beautiful. That is a really good tip. And so what are your numbers looking like? How much are you spending on this place?

Look, I'd been sort of the early, early twenties through to sort of $30,000. I, I always put a miscellaneous amount of five grand in there. And the reason I do that is because if five grand knocks the deal on the head, it's not a particularly good deal. So I just figure add that in, you're going to find five grand worth of somewhere. Especially if you're buying an older place like I said, where it's ugly, it needs a bit of work work. Generally if it's ugly it's because it's been left to get ugly and therefore something hasn't been maintained. You might find the air conditioners are stuffed and you need to replace them. Yeah, okay, you'll find something.

And so with this then, so you're talking like sort of what, 25 to 30 grand then, and you're adding a whole bathroom. What's the Terry Reese numbers on adding a bathroom?

Well, yeah, look I'm, I'm a doer, not a hard and fast number guy. Todd, you might be surprised to know the last one we did where I added it all up, yeah it was around nine and a half grand a turn and that was on a concrete slab job to turn from a, like a walk through. It was a very strange design, like a walk through half bathroom and then a toilet half bathroom thing. We just stripped it back to nothing and, and redid it and it ended up costing us nine and a half grand. Paid for a Tyler to come in. He's a really good mate of mine and he'll tell you that I ripped him off but he's a liar and can't be trusted. If you're listening, Zaz listening. Okay, these are good fellows as.

All right, so you get it done for a nine half grand that by the sounds of things, there's a bit of mates rates in there. So if anyone listens to this and, and with obviously trade prices. I think I just paid something like 2.20 for fuel today. It's, everything's going up a little bit so maybe it might be sort of 12ish. Would still be some comfortable kind of numbers.

Yeah, or even more to the point, it's more like you. I might be able to get cheap tires because I've got a mate who's a Tyler. I might be able to do. I'm an electrician by trade. I'll be able to do a bit of electrical work myself and save myself some money. But you might know, you might know an electrician and, or you might be a plumber and you can do your own plumbing work or whatever it is or you know, your dad might be a sparker. You can you can use what's around you and not use but you know, make the best of your surroundings to try to cut down some of these costs like there's plenty of different things you can do. One, do yourself and two, have friends help out.

Absolutely. Like you said before, beers and barbecue will really go a long way when it comes to stuff like this.

My mates love drinking my beers.

And how about renovating your houses?

Oh look, you have to apply them with the beer before they renovate their houses.

Yeah.

And as far as the numbers are concerned mate, the final figures, what are we looking at as far as where do you reckon this is going to revalve to sell to? Gross rental yield? Like what are you going to do do with it?

To be honest Todd, I probably actually wouldn't have bought this one. Just, just going over the, the numbers of it like I think I said at the start it was it's not quite ugly enough. I like I always used to tell agents that I like houses that scare people and, and that just means I'll buy without as much competition. So this one probably sold for fair market value. It's so it's, it's really hot at the moment in that Hallett Cove sort of area. I've actually just bought a place for me to live in in the area and it was yeah pandemonium. So I probably wouldn't be trying to buy a, any project like this in this sort of market but in saying that I still think that you can end up with a pretty good result out of this one if you did buy it. If a friend came to me with it and said hey I've just bought this, what do I do? I still think you can get out of it with a decent result. So look, I think it would probably at the time of purchase it's always obviously hard but I think it would value up in that mid to high sixes somewhere there I just put a number of 680 the way the market is at the moment. I mean you know if somebody walked in with 750 you'd go geez that's a lot. But you wouldn't be too surprised not you know, that's, that'd obviously be out of the ballpark.

And this, this is the whole thing for everyone listening at home now as well is that this first went out this Renault pack to Michelle, to Terry and to Jane was it three weeks ago, four weeks ago. So at the time of listening now the time of recording that the market has already shifted and from the time of Putting everything together the, to the numbers that Terry's saying, it's like. Yeah, then the kind of high sixes is probably about reasonable. But now getting into the sevens is definitely not unreasonable. It's just, that's how quick this is moving now.

Yeah, look, yeah, you could get. Now it's. Yeah, you could, you could even get high sevens now. It's, it's just mental. It's a good market to hold property.

Yeah, absolutely. All right. And so speaking of which, then. So are you holding this? And obviously you wouldn't have bought it, but if you were forced to gun to the head, this is now your property. What are you doing?

Geez. Property just got real serious, didn't it?

Pretty serious, actually. Sorry.

Yeah, yeah, no, look, I, yeah, I would definitely keep it.

Yep.

There's just too, there's too many transactional costs and until all the banks say no, Terry, no more money, I can't see myself turning over a project like this.

Okay, and what do you reckon this would rent for?

Look, I had a quick look just before and you're probably looking about the high fives. There was one compare that was fairly comparable at $600 a week. But you know, that's an asking rent. So if you, if you're at a. Out of $600 a week, it's a 5.1-ish% yield all in stamp duty buying costs, you know, the whole box of dollars.

Okay. So still 5% yield is pretty respectable, especially in this market.

And look, Calico's a lovely little suburb, you know, spoken by a bloke who just bought a house there. So. But yeah, look, the only other thing I was going to sort of flag was that at 1983, prime time for everybody's favorite a word, asbestos. So just, just keep in mind if you're ripping out houses like this and ripping out walls and houses like this, there's, there's possibly asbestos in a lot of different. It's not too expensive to get it tested. It's under a hundred dollars. And yeah, it's probably a nice little or a good thing to do for pace and more reminder.

I think that's, that's a really good tip, mate. Yeah, because a lot of the time it's, it's in the eaves and if you don't touch it, it's not a problem. But if you are going to be renovating and you are touching stuff, that's a brilliant tip actually.

Yeah, living around, it's fine. It doesn't jump out and bite you. But yeah, if you, if you're going and playing with it, it's, it's not my stuff. I, I wouldn't like to end up with the asbestosis.

I don't know, it's. It's a terrible, terrible disease though. But as far as the, the numbers are concerned, so you're buying it for your 580 as everyone else has. You spend it around 25:30, you're going to get it rebound for roughly around that kind of high sixes mark and then you're going to be renting it out, getting around a 5% yield. So it's in it for the long term for you?

Yeah, I think so.

And that's turning into a 4 and 2. Yep.

And I think in that area that'll, that'll rent very, very easily. I think people are keen for that sort of configuration.

Absolutely. 4 and 2 is a lot harder to come by as far as a renter is concerned. You would not have much vacancy at all, if any.

Beautiful.

Perfect, mate. Well, thanks again for jumping on the show. Is there anything that you wanted to leave as a little parting words of wisdom?

Oh, no, mate. I've parted with as many words of wisdom as I could already.

All right, Terry Rees, thank you so much again for your time, mate. You have yourself a fantastic rest of the week, bud.

Thanks, Todd.

As much as after Jane, I was probably feeling a little bit deflated and thinking maybe this was a terrible idea. I now think this has actually been a better outcome than what I was originally planning on it being anyway, anyway, because we've got three different renovators. One would walk, one would absolutely gun the budget for next to nothing, still walk away with a nice tidy profit and sell the property. 1. Well, like we said, Terry's probably not buying the property, but if he did buy the property, is still walking away with a pretty decent equity gain. Plus he's getting a 5% yield out of this as well. Three totally different people, three totally different outcomes, but with the exact same property. I really hope this one's made you guys think because if you are looking at buying a renovator better, I gotta say I, I agree with a little bit of all of them and, and fair, like in all fairness as well. There's probably a part of Michelle that read the, the brief as well and said, I don't know if I'd want to buy this either, but she was probably just like, way too like. Yeah, didn't want to say it because I know how Michelle shops and Michelle doesn't shop at the Front of the store, she, she shops in the bargain bin at the back. Okay. And I say that with all love and respect to Michelle. But this woman can negotiate long like not many people you've met before. Like she is very talented in finding absolute cracker deals. And let's be honest, 580, it's not bad. But this wasn't an absolute cracker deal. Like Terry said. It's about finding that, that proper ugly duckling. The way I used to describe it to agents and actually still do. Like Bianca and I actually going to, to an auction next week. Is that the worse it smells, the more we're interested or that the unsafer you feel walking through the property, the quicker I want you to, to call me because that, that's what you want. You don't want to take something from a five to an eight. You want to take something from a two to an eight. It's about making sure that that gap there is big enough. And like Jane kept referencing the disparity between the bottom end of the top end. It's so important. It's one of the reasons why when you go back to the research on here, you'll notice that I've actually ordered all of the recent sales from the bottom end to the top end. I do that every single time. Because it's one of the best ways that you can get a clear snapshot of the bottom and the top of the market. And if you were doing this again, so let's say you were going to actually maybe follow Terry's route with this and go from a three in one into a four and two, which means like three bedrooms, one bathroom into a four bedroom, two bathroom. You're going to want to make sure that you just get a sales history report of just four bedroom, two bathrooms. Ordering that from least expensive to most expensive. But making sure that you're really paying attention to square meterage because this is still 138 square meter house. So don't go comparing yourself to 220 square meter four bed, two baths. Because it's not apples and apples. But if you can find other ones that are around that, yeah, 130 to 160 kind of mark perfect. You've got some good comps there. And if there's that real disparity between the bottom end and the top end, fantastic. Now, now we're really talking. But I think the most important thing about episodes like this is taking bits of everyone's knowledge. Like I said at the very beginning, all of these people are amazing at what they do in their own separate way. So if you can take maybe little bits of what Jane's talking about with analyzing an area, taking bits of the way that Michelle controls budgets, like, bloody no one I've ever met before and is just an absolute bargain hunter, and then take bits of what Terry's talking about with, like, rustling up other people, like, seriously, the amount of what you can actually get from friends and family with a carton of beer and a barbecue. And again, like Terry said this really, truly, it's not about using people. Okay? This is. Is about. People find it interesting a lot of the time. If you're the guy or the girl with a house to renovate and they've been like, oh, I wouldn't mind renovating something, or, yeah, I'll give you a hand with that because you gave me a hand with this. It's a very Australian thing to do. We help each other. If you've got 20 properties by now, your friend might be like, hey, just go and pay for it. I don't care. I'm not helping you anymore. But if you're on number one, number two, or whatever it is, like mix, mix a little bit of what everyone's saying together. Because there might be takeaways that you've gotten from this that I haven't even put in the recap. But it's just important that you're using these, that you're listening to what they're saying and you're like, you know what? Actually, that, like, copy paste. And I'm going to put that into what I'm actually doing with my next project. But as we always say, this is not financial advice. Please seek independent, professional financial advice. And if you've listened to this and you've just gone, nah, too hard again, well, then support the people that support us here at Pizza and Property. Head on over to investor kit.com if you want someone to actually find you the project, you don't want to go searching. You don't like the data side of it that Jane's just described, well, then go over to investor kit.com have a chat with Arjun Paliwal and his team and help them. Help them. Or they can help you the other way around. It's not that you helping them get them to help you get from where you are now to where you want to go with your renovation project, sourcing the deal that the numbers actually make sense on. But seriously, guys, I'll be so excited when you guys actually start sending me your fiso's through. Like, I want to see them. At this stage, we already get about sort of like 20, 30 messages a day through Facebook from people listening, which is fantastic. Like, keep it coming. And I want to see how many of you actually really benefited from this. How many of you actually listened to this episode and went, oh, actually, you know what, you missed a spot. I do this. Or actually, this is a little bit different. This would actually work. Like, send it through. You can find us on Facebook, find us on Instagram, wherever you are. Pizza and Property podcast, give us a search, give us a like, give us a follow and give us a review. If you've enjoyed this episode, go on over to itunes as well and leave us a five star. We would love it. Or if you don't like it, yeah, I hope you don't leave a one stop, but you can if that's what's in your heart. But otherwise, guys, my name is Todd Sloan. This is the Pizza and Property podcast and as always, have yourself an amazing rest of the week and stay awesome.