Renovating does not equal Riches

How exciting it is to see someone who has actually done a renovation project and they’ve made hundreds and thousands of dollars in it. You might think that it is easy to, I guess, replace the yield income by doing a renovation project. We’ve all probably heard some stories and we’ve seen the television shows with the really great outcomes and of course, I’ve got a television show myself so I’m not going to knock them down but largely, it’s all about entertainment.

My message today is renovating doesn’t automatically equal riches because whilst you’re sitting at the comfort of your lounge room at home watching these shows, you aren’t seeing and physically and emotionally experiencing some of the turmoils that these people are going through and essentially, it’s hard to relate to the fact that you actually are creating yourself a job.

So for most people who undertake a renovation project, quite often a lot of the experience that they get from it happens at the end of the project when they look back and see if they make any money. I’ve got a lot of friends in the industry that make really good money from doing both cosmetic and structural renovations but there’s one fundamental key. They are very very experience at doing it. And so, if you think about the fact that one in eleven working Australians actually buys an investment property and of that one in eleven working Australians who do buy, 73% of them actually stops at one investment property, its actually not that common that people step outside the square and take on some extra risk for the reward that comes from it. So, my advice here is that you shouldn’t enter into a renovation project lightly. Now I’m a strong advocate that there is benefits to renovating but I don’t think its for everyone.
I guess my message here is whilst renovation is exciting, property investing should probably be really boring. Cause a lot of the portfolio plans that we put together for our clients usually evolve around them paying off the principal place of residence and maybe buy three or four investment properties over a 10 – 15 years period, space usually 3 – 4 years apart and getting their debt structure right so that eventually they can retire all of their debt in the portfolio including the principal place of residence and ultimately end up with a passive income at the end of it without it actually giving them any sort of adrenaline rush at all. The point is simple, property investing doesn’t necessarily need to be about trading your time for money. You can actually do it really passively and you can do it very very conservatively. Most amateurs renovators that I come across find that the lessons that they learn throughout the process means that in the first couple of projects, they don’t necessarily make a lot of money.

It’s kind of like a tuition fee for them to learn how to do it. It’s not actually when they get into their third or fourth project where they start to see the light at the end of the tunnel and make some significant cash.

So my message is very very clear here. Investing should be really really boring and if you want to get some adrenaline from something, go bungee jumping. Don’t look for it in property investing or property renovating.