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the biggest mistakes renovators make - ep263 renovating for profit can be tricky business.it has a lot of pitfalls and mistakes that renovators make and it's not actually as easyto make profit as we might think. there's a lot of people who go out there and renovateand the only reason they make profit is because the market goes up in value. if u actuallyanalyse the property and look to the capital growth you could that the renovation theydid didn't actually make any money and we don't want to be these people. we want toavoid the mistakes that other renovators have made so we can ensure that we take the rightsteps to maximize our returns on renovations. to i've got with me jane slack-smith fromthe ultimate guide to renovations. she started

off and knew she wanted to renovate a propertydidn't know how to get started but started listening to the mistakes that everyone elsehad made in their property endeavours. she learned from those mistakes and she ensuredthat she didn't make those mistakes and has gone on to be a very successful investor.she now helps hundreds of people improve their renovations and helps them to renovate theirproperties for profit. so i wanted to get her opinion on some of the biggest mistakesthat people make when they're renovating a property. so here's the interview with janeslack-smith from the ultimate guide to renovation. hey guys this is ryan here from onproperty.com.auyour daily dose of property education and inspiration and today i've got with me janeslack-smith who is my go-to person for renovation

and also the creator of the ultimate guideto renovation and today we're talking about the biggest mistakes renovators make. janehas a course where she works with hundreds different people helping them to increasetheir profits through renovations. so if anyone knows the biggest mistakes she's either madethem herself or she's learned them from other people. so thanks for coming on today jane.jane: my pleasure ryan. ryan: all right so let's not waste any time,let's get straight into it. what do you think are some of the biggest mistakes that renovatorsmake? jane: i have so many i want to share withyou. so when i started investing [[inaudible]] over 15 years ago i went to all these freeseminars and things and i was diligently writing

down everyone's tips and they all became thesame. would then i got really interested in them saying i made $1,000,000 and then i lostit and then i made it again. i was like i want to know how you lost the money and soi started then taking notes on everyone's mistakes. and my thought was if i knew everyone'smistakes and how they had done it i could plan how not to do it. i could just jump overthat period of 3 to 5 10 years of learning that everyone else had and go straight intoprofitable renovations. so i've kind of collected the mistakes of others have made over theyears and that's what i do. i teach people how to get rid of them. so i guess my numberone mistake renovators make is that they're renovating is it's in the wrong location.so they're renovating in an area and i have

its what i call my strident strategies soas a low risk investor myself and wanting to protect my very small nest egg that i startedwith it was important for me that i understood that i was going to be making money not justin one way but i decided i wanted to plan a b and c to make money. i developed thisstrident strategy which was mine below the market so i could make money immediately buyingin an area set to grow with growth potentials. so time heals all wounds. if i got everythingwrong [inaudible] sit on it for 50 years and it was never going to go all in value ratherthan what i had planned at the time. i wanted my properties to double in value in less thanseven years and then i want to add value. i'm going to manufacture equity and springboardrather than having to wait to create equity

over time and with growth by renovating. sothree ways to make money so if you're buying property in the wrong location that doesn't have the[inaudible] that growth i think that's number one mistake renovators make. ryan: yeah and as well people who pay morethan what a property is worth because they get emotionally attached to it or somethinglike that then that doesn't work with your strident strategy where you're saying buybelow the market value so you get instant equity there. if people are buying above marketvalue because the do get emotionally attached so they don't know their research like you'resaying people should do when even if they do renovate it and bring it up in value chancesare they're just going to bring it up to what

they already paid for it. so i thinkjane: exactly and you see people at auctions they get there's this kind of like ego thingthat happens. now it's like uhh he went a thousand more than me. it's only an extrathousand and you know 20 grand later he's got like and i won i'm like did you reallywin you just paid 20 grand more than what it was worth.ryan: well that how real estate agents do auctions for a reason cause people get suckedin to the hype and that ego as you said. yet more more more more and they end up payingtoo much for it. so i think knowing how much to pay for your house is very important andknowing what area is very important. we've talked a lot about that in the last interviewthat we just did. so i'll link that up below

and so people can check that out if they wantto learn more about how to choose the right area to renovate in. why other mistakes doyou think people make? jane: so starting with the right area it'sand then doing a research so as you said you need to have comparable sale. you need tomake sure that the property has a capacity to add value to it. you need to make sureit is renovate-able and you need to understand that this profit and i know we've discussedthat before but one of the things i find people think is that un-renovated equals value. andthat's not the case. you can't make a profit out of just a property that needs a good lickspit and polish. ryan: so when the real estate agent has itsjust says on the listing renovators [inaudible]

or handy man special or whatever it is theysay it doesn't actually mean that it's a good renovation.jane: well it could be but just not to make money out of.ryan: it's fun to renovate and it's good to renovate but you're not going to make anything.jane: i think in 2014 there was that i actually had the chance to go and visit the block andhave a look at the properties there and for so many of the people here spent their bloodsweat and tears in those properties in renovating. they were renovated wrong for their marketplace. it was completely wrong location and if there's an example of how the wrong locationcan actually make u not make money it's sitting there in the block in that instance causeit would just, it was a let's face it. so

wrong location, not doing a research that'snot going to comparable [inaudible] so you can validate the right price since so youcan buy below the market. not understanding that properties have the capacity to add valueso you need to be able to we're not talking about house and packages here. we need tohave a property that you can do up but just because you can do up doesn't mean that youcan make a profit. so understanding there's money to be made and doing it to budget anddoing it to the target market understanding the demographic. i find time and time againpeople going with the notion that you simply can buy with a notion as well and that they'rerenovate with a notion and it's well like you know my jury bathroom at home is not gettinga makeover but hey what about this great [[inaudible]]

i can have in this house and i can have allits my dreams fulfilled. ryan: yeah and this toilet that's $2000, i'mgoing to go ahead and put that in because we all absolutely love that.jane: or it could be a bidet with a toilet next to it. oh i don't know let's not go there.it's understanding what that target market is. so if you don't renovate to the demographicand understand the demographic you want thereafter and this means it's for every let's say 10houses that i look for or 10 [inaudible] i look for in the suburbs i'm adding on onethat's renovated to the standard that i want. so i want to understand what that standardneeds to look like and i'm also adding on an extra property that's a rental propertyon the market at the moment and i'm sitting

around doing a bit. you know pink pantherdetective work there listening to conversations that the people walking around the house going"oh it doesn't have a dishwasher or it doesn't have air conditioning or it doesn't have barson the window, there's no carport and i'm listening to their objections to renting theproperty or they might walk in and go "oh wow it's got a bookshelf." so i'm like bookshelvesmental note, $200. bookshelves are going to get my property a renter [[inaudible]]. soif you just understand what your market wants because if you are buying renovating to holdthen you need to understand what you're target renters want. it's not what you want.ryan: so when you say you're adding one that's renovated and you're adding one that's beingrented, do you mean you're doing recon work?

you're going to those open for inspection.jane: absolutely ryan: you're more there to listen to whatthe people who are looking at the house are saying more than you are to look at the houseitself is that right? jane: exactly and also i do a bit of pre-interviewwork on my rental managers. so i might say to the person where's the bus stop, oh i don'tknow. you might ask something like would the landlord put in foxtail or is that neededlike do people do that? something that is important to you and if you're sitting theregoing like is seriously i'm on my blackberry, i'm having a little chat with my mates onfacebook [[inaudible]]. this is not a rental manager that i want. so when i want to rentmy property so i'm doing a bit of recon on

who i might have looking after my listingas well. ryan: that's very clever. i think going backto people who are emotionally renovating their property and renovating to their taste. thatis a big mistake that people make over and over again. and i have watched a lot of renovationshows and stuff like that like property ladder. everyone always ignores the data ignores whatthe market wants and just starts what they think is awesome. i love pink bathrooms somegoing to make it pink or whatever. do you is there any way that people can actuallyavoid that emotion that they get when they are renovating a property because i thinkthat's just so natural to all of us to want to do it the way we want to have it.jane: i think you need to first put on your

business owner hat and go i'm treating thislike a business [[inaudible]] hundreds of thousands of dollars here and you know i wantto make money out of this and i didn't ask to make money immediately so i can eitherpull the money out and use it on whenever i want or buy another [[inaudible]]. so youneed to know the numbers are what you need to concentrate on. we're not talking colourschemes. i'm right in the middle of doing a quick renovation in between tendencies ofthe little unit that i have in the eastern suburb sydney and i'm based in victoria. soi've got a project manager that sends me photos every day. i selected the titles of the photoshe sends me we got four tiles which one did you want and which way did you want them laid.i'm not spending hours picking out the different

tiles. i know he does bathroom renovationsfor landlords. he understands what type of tiles i need. we want the fabulous look buti want a low cost solution. so it's numbers game, it's like ok let's get the quality productthat's not going to require a lot of maintenance, one that's gonna look great and not be objectionableto people cause it is the pink or the blue. i've got marble tiles i've always wanted themmyself. it's all about the numbers. so i have a quick quote calculator that allows me togo in when i'm actually doing my significant due diligence on a property. that allows meto estimate what the price of the renovations going to be and then that becomes my budget.i define a little but further and so i'm measuring it against that when i'm doing my renovationsand it allows questions when something comes

up. i know my very first renovation i gota little emotional and i fell in love with this bath spout that was $500. i had thismental image of this bath spout being in the middle of this 6 foot long bath and you cankick on the water with your foot while drinking your champagne and one person could be oneither end the plug in the middle so no one had to sit on the plug. i had this image inmy head and i fell for this bath spout but i knew to buy the $500 bath spout i eitherhad to give up something or make some money somewhere. so i ended up [[inaudible]] mykitchen on ebay to get the bath spout. ryan: so you got the bath spout in the end.jane: i got the bath spout. i think the valu-er was very impressed. i was impressed i gotto live in that property for a further 6 days

i think [[inaudible]].ryan: so we've covered a couple of mistakes that people make so obviously not doing theresearch maybe buying the wrong property you're buying over value. talked about emotionallyrenovating it to your needs and not renovating it to what the market wants. are there othermistakes that people make like the ones i'm aware of?jane: ok well i've got one for you that you may not be aware of, and this is especiallyin the lower price [[inaudible]] so we're talking less than $450,000. is that, whenwe think renovations often people think i have to do the renovations straight away buti can't afford it and there i can't buy a renovation property with renovation potentialand the reality is you can hold a property

as long as it's livable you can possibly doa few cleanups and move but i'm very very clear on the fact that often people thinkthey have to renovate. let's pull out the bathroom and fix it up rather and replacerather than repaint. so i have a whole repaint or replace strategy. which is if i'm goinginto a property i'm like hey can i just pull off the bench top and put on a new bench topor can i paint and one of the things i show, this video that i have is how i actually paintthe bench top to make it look greyish. so less the $100 so i've got this whole new benchtop and i think i had one student who attended the ultimate guide to renovations back in2013 and he had done 12 renovations. he's quite experienced but he wanted to learn somemore and he was going back to renovate some

of the properties he had and i kind of forcepeople to go through these calculations of making a profit and he went back and saidhe would have thought the successful renovator and going back through the numbers he realizethat the capital growth had make him look like a sensation as 6 of the properties hehad lost money on the renovation and he was in the midst of pulling out a kitchen at thetime when he saw this video and he's like what can i do and he's saved $5500. he wentback in and just top this up and you know he did that and i think that kind of mentalityas i'm renovating and i watch these renovating shows and they pull everything out on thefirst day and then they get into a blank canvass. you don't need a blank canvass often. startingwith what you have and understand should you

be replacing removing or maybe repaintinga [[inaudible]] something. that is a top tip on mistakes people make, they rip stuff outand go ok now i'm starting. ryan: i think that's a good tip. i rememberwhen it's the we were renovating my parents' house to sell it and we got the agent in forreview before we dig up the place and we got him in afterwards and with the kitchen itjust had it was a white kitchen with a white bench top with a wooden trim around it andso we painted the wooden trim white and we took off the old handles and put in the handlesthat were in fashion. when he came back it would have been a month later or somethingand he was like did you guys replace the kitchen? and we were like no we just pained one trimand replace the handles. so it can have a

massive impact just by doing those sorts oflittle things. and you don't have to spend $10,000 $20,000 on a new kitchen.jane: if you can think of that in relation to me and my strategies to create equity topull money out to manufacture equity pull money out so i can do it again manage thatconversation with the valu-er wow nice kitchen we're like ye.ryan: new kitchen [[inaudible]] ye it's new, sure it is.jane: so much time and effort wow and look at this beautiful bench top. i think peoplewill also there's some mistakes people make in potentially not spending some money sothey've done a beautiful renovation they've bought the property in the right locationat the right price they've got the right target

market they've done the renovation and it'stargeted to who they are directing this rental property at and then they forget about streetappeal. they do nothing outside. they may not put in a few plants and as i said i'mrenovating for my valuer often. i'm remembering the tenants going to help me hold this propertybut number one is the valuer. he turns up on the street or she turns up on the streetand they look at the property and they're like another blah. it's nice to delight themwhen they get inside but for me [[inaudible]] looks good. most people if you're going tosell a property they make the decision within the first 30 seconds of coming to the frontdoor. i want this house. so if you're flipping that street appeal and concentrating and iknow when we moved from sydney to melbourne

and we were having our house revalued [[inaudible]]my husband went and mowed the entire block [[inaudible]]. so as the valuer drove intothe street he was like this is a nice tendered street. my husband does like mowing stillwe took it to that degree and the property was consistent with the impression that thevaluer had as he pulled up. ryan: ye i remember there was this one propertyi used to walk past every day to the shops back when i lived in sydney and there wasthis house that just had overgrown grass it was disgusting. it had grown all over thefootpath so there was no footpath left and i'm walking one day and like the footpaths'clean. i'm like what is going on the grass is mowed. i'm like oh my gosh what is happening?in turns out the house next door was for sale

and was open for inspections so they musthave done the same thing as mowed these people's lawns so the neighborhood looked better. ithink from personal experience when you go and look at a property if you're looking atthe outside and it looks like a good property from the outside your kind of expecting thebest on the inside and you go in looking for good things whereas if you can see the dingygarden and it just looks run down and you go inside looking for the problems so youdon't really see the good thing's. so i think street appeal is a very important thing forpeople to look into. jane: and i think that exactly on that samepoint ryan is you walk into a house and you're all kind of wow this is great there's nothingobjectionable here. it all works and you walk

into a bathroom and you're like ahh theseguys had a go at tiling themselves. so what are the things they've done and cut cornerson and you're like looking for problems. so if you're not a tiler don't tile is my advice.leave it to the professionals. it's going to cost you in the long run.ryan: so doing a dodgy job is just gonna, because that's the thing even though it'snot that much worse than getting someone to do it like you don't think it's that bad.you'd live in it. the soon as people start seeing little problems around they start lookingfor more problems and it's like when you go to buy a new car and then all of a suddenyou see everyone driving that car you see a problem and then you start seeing theseproblems all around your house. so how would

people avoid that? would that be just to getthe experts to do things but wouldn't that through you out of budget.jane: no i don't think so. i mean if you're very good at tiling and you've done your saturdaymorning tiling tips [[inaudible]] or something and it's something you're really confidenton and you're at a lower price point in the market then i would suggest that when you'restarting off and you're renovating yourself you don't see the value of having the professionals.we had this house we were renovating well two houses [[inaudible]] renovating when wefirst started and we were up at 6:30 to 7:30 every morning painting at 6:30 at night to11 o'clock at night 20 hours on the weekend painting this three story monstrosity forlike months on end and then i [[inaudible]]

so the same property next door i think itwas like $4500 or something this guy did in 5 days. so we wasted 3 months painting thatin theory [[inaudible]] we're saving money we're doing other things as well so we didn'tlose money but if you're losing that time because you can only get to tile on the weekendsthen you're losing time in the market and that can be a loss that people don't actuallyquantify but it is a loss. so the amount of time you're learning how to tile or i'll getaround to the landscaping myself because how are can it be and i'll build that retainingwall. [[inaudible]] is money. ryan: you're still paying a mortgage on theproperty and you're not getting rental income coming in and so those mortgage repaymentsare coming under their expenses i guess you

wouldn't have to pay if you got someone todo it and do it faster. jane: exactly and just simple things likeyou can do [[inaudible]] walls to save money. so the painter can do the walls. i'll go andclean things up and put things in the skip. i'll hire the skip to save money on just doingthe. you can do things. my expertise is finding the property, finding the potential, projectmanaging the professionals in doing that and i know when [[inaudible]] and afford all thosepeople and you try to give it a go yourself and that's fine if you can't afford it butjust realize that time factor if it's the delay there and when your property availableto rent. in theory i understand from the tax office that you actually claim the tax deductibilityof that mortgage repayment either. so the

property has to be available to rent for youto actually claim an expense against it. so you could do things, like i've seen people,there is a doggy front fence so rip out the palings and go and put new ones up which isreally expensive when in actual fact they could kind of just push it up and put in somenew posts and paint it. that's less than $100 and less than a day's work they have got thenew fence and they've got money in their budget. so just simple things like getting a clean,a pressure cleaner to clean the driveway or maybe you could [[inaudible]] with an [[inaudible]]gun jus to create the impression that you want without the expense because renovatingfor profit for me is about perceived value. it's not about actual cost. so your renovationsthat cost you $10,000 that adds $40,000 in

value, that's what you want.ryan: ye and like we talked about i'm not sure if it was this interview or the lastinterview we were saying things like the electrical work and all that sort of stuff doesn't getseen and so it doesn't add profit and so you're right. it's not about the cost it's aboutwhat people perceive the property to be worth and the work that you have done to be worth.so do everything you can to create maximum perceived value with minimum cost and minimumeffort. jane: yep absolutely and look just do yourresearch. i mean the biggest mistake people make is they don't do the research upfront.they don't renovate for the target market which is understanding who and what they areand then over capitalizing and not keeping

to your budget cause [[inaudible]] an extra$500 what's that and those $500 they add up. ryan: it quickly becomes $5,000 $10,000 andthen all of a sudden even if you sell at the projected price you had you're not going tomake any money. so it's very important to stick to that budget. thank you so much foryour time jane. me and jane are going to be having a webinar together talking more aboutrenovation and talking about her strategy of buying two properties doing one renovationand getting a $1,000,000 in the bank. so that's going to be on the 4th of march. i'm veryexcited about that. if you want to get access to that webinar absolutely free go to onproperty.com.au/renoand you can get access to that. that's going to be a pure content webinar so there's goingto notes styles pictures at the end there.

can you talk a little bit about that webinarand what we're going to be covering jane? jane: oh look i'm really excited about this.it's going to be about 90 minutes so we're going to squish in as much as possible thati can but really i wrote a book "two properties one renovation - a million dollars in thebank" cause i think that a lot of believe that they need to have hundreds of propertiesto make money and the reality is that if you can have two well positioned properties withon renovation that you accumulate over 5 years and you can rest for the next 10 years whilethey get on and growing in value and paying rent and covering your costs and you know15 years later you sell them off pay your capital gains tax cause that's a cost a lotof people forget and pay your selling fees

etc pay off your loans, put $1,000,000 inthe bank and before taxes a $50,000 passive income in today's money and 5% return. soi really think every day australians if they're looking low risk and they're looking buyingthe right property its best the property they can and manufacture equity through renovationsthen pushing the rents up to help them pay for their costs. that's a great strategy toallow anyone to actually achieve their dreams and that's what i want to share with as manypeople as possible. ryan: i'm excited to delve into that strategyand to learn more myself and to share it with my listeners and my readers. so it's goingto be exciting so again you guys can get that by going to onproperty.com.au/reno that'sgoing to be on the 4th of march. so get on

board with that. there's not going to be alot of people ask me are you going to have a replay of the webinar cause i can't makeit but we're not actually going to have a replay of that webinar. so we do want to rewardthe action takers so get on board, it's going to be a great webinar. well thank you so muchfor coming on jane and we're going to be back talking bout how to maximize your return onrenovation in the next interview. i'm excited about that.jane: me too. well i hope you enjoyed that interview withjane slack-smith on the biggest mistakes that renovators make. i hope that you can learnfrom those mistakes and not make those mistakes yourself when you go out and renovate. let'stry not to get too emotionally involved let's

try to do our research first and let's tryand avoid those mistakes. if you enjoyed the content that we shared then we do have a webinarcoming up which we've already mentioned in the interview but that's on the 4th of marchand we're going to be talking in more detail about jane's strategy which i love which ifound very achievable for a lot of people and that is two properties one renovationand a million dollars in the bank. it's a great strategy that i absolutely love andi'm looking forward to hearing more about that. jane's going to be talking more aboutthat overall strategy as well as some renovation tips in the webinar. you can check it outby going to onproperty.com.au/reno and that's on the 4th of march. so be sure to sign upbefore the 4th of march. if you're watching

or listening to this after the 4th of marchthen check out that link anyway because i'm going to have something special for you guysover there. i don't know what it's going to be yet but after the 4th of march there willstill be stuff available so that's onproperty.com.au/reno. i look forward to talking with jane in thenext episode where we're talking bout how to maximize your return on renovation. sowe are going through room by room in the house, what are the biggest ways that we can havean impact without breaking the budget without spending huge amounts of moneys? so that'scoming up in the next episode. so until then stay positive.