Have you researched your ideal type of property to renovate but are now wondering about researching the important stuff surrounding suburbs?
Maybe you’ve already started your research, and have honed-in on a particular suburb. It has nice parks, the neighbours seem lovely, it’s close to good schools, and there’s no giant factories being plonked anywhere.
Wait, are you buying this house for yourself to live in or as a house-flipping, money-making machine?
Investing to renovate and investing to live are two different things. When I talk about making it personal, I don’t mean the fluffy “will my kids enjoy this backyard?” type of personal.
What I’m talking about is the personal that will click in perfectly with the rest of your renovating for profit goals.
So, don’t fall into the trap of getting personally attached to the property. It can lead to things like overspending which can hurt your end margins. I’m not saying that you shouldn’t go for that property with the nice backyard or to good parks – just don’t get carried away by just that aspect of it. There’s so much more to a property than having nice neighbours.
Let’s jump into it, then.
Finding your patch
What do I mean by “patch”?
I’m not talking about gardening here. Your patch is unique to you. It’s that one spot on the couch you always fill, the one with the slight crease. It’s your coffee mug at work, the one with the handle that fits your hand perfectly. If you replaced that couch it wouldn’t be as comfortable. If someone took your mug and you had to use another, the handle might be an odd shape, and the coffee just wouldn’t taste as good.
It’s all about finding the perfect fit. And you know what you know, right?
I don’t know what coffee mug you like, but you do.
This is the same with finding your property “patch”. If it already works for you, then it’s probably a good idea to stick with it.
So then, how do you go about nailing down your patch?
Well, here’s a good checklist to start with.
Old dog, new tricks
No, this one’s not about your old Lassie learning to roll over. This first one is all about how old the properties are in that suburb you’re looking at.
Are they looking like Captain Cook may have built them with his First Fleet? If that’s the case, they’re probably heritage listed, and a huge headache to renovate. Cross that one off your list.
Or are they all the same-looking, modern, rendered houses in different shades of grey? Were these also built in the last five years? Best to avoid these guys too, as they’re likely too new to need any sprucing up.
The suburb should be something in between the two above examples. If it’s way too old it’s likely to have restrictions surround renovating, and if it’s too new you might not be able to add enough value to make a good profit from your efforts.
It’s like Goldilocks and the porridge – it needs to be juuuuuuuust right when it comes to age.
Looking for the middle ground
The second thing you need to consider when you’re looking for your patch is the median house price of that suburb.
What do I mean by the median house price?
It’s actually really simple. No complicated maths required, I promise.
The median is the halfway point of all the stuff that’s been sold in the area recently. So, if 100 houses have been sold, it would be the house price right in the middle – the one with 50 house prices above it and 50 below.
That number is different to the average, which is about adding all those house prices together and then dividing by the number sold (i.e. 100).
You’re not interested in the average, it’s the median number you want.
Why? Because it will show you a more realistic number for your own profit goals. The average would take into account any properties that sold for extremely high or extremely low – and these might mess with what you’re aiming for. You don’t care about that mansion on top of the hill from the 19th Century that just happened to go to auction last week. It’s not what the rest of the suburb looks like, and that’s why it shouldn’t be reflective of the price. Unless of course that whole suburb is made up of giant mansions on hills.
Honey, how about a walk on the beach?
You shouldn’t get attached to a suburb or property. What you should do is look for its strengths and what makes it attractive, yes, but it’s not just about that.
Well this point IS about that. Just because it’s not the be all and end all of finding your patch, doesn’t mean it’s not important.
Of course you should still consider what the suburb has to offer – because at the end of the day, and more importantly, at the end of your renovation, you will be selling it (or renting) to someone who WANTS the lifestyle your property and suburb are offering.
Does the suburb have a beautiful park where your market would enjoy going for runs with their dogs? Does it have some hip cafes for the young professional to enjoy on the weekends? Is there a tram, train or bus route that makes it easy for them to get to work?
See how it’s not about you in these questions?
The difference is that you will buy and renovate a place with your target market in mind. You won’t end up buying it because you have become attached to it and have failed to consider what your market may want.
Lock your doors, bar the windows
If that’s what you’ll be warning your market when it comes time to sell, might as well scrap the campaign. No matter how pretty or cosy or welcoming you make that newly renovated house, none of it will matter if there are bars on the windows and seven padlocks on the door.
When the area is one where drug deals happen outside the lawn or sirens are heard four times an hour, most people wouldn’t touch it with a ten-foot pole. And if they did, there probably wouldn’t be a wad of cash dangling on the end of that pole for you to realise your profits with. ͞
It’s mine!”, “No, it’s mine!”
No, this isn’t the sound of your kids squabbling over a new toy you just bought them. This final point is about how many other fellow renovators are already digging up your patch.
If there’s too many kids in the playground’s sandpit, you might find it easier and less squishy to goplay elsewhere. This isn’t to say you can’t join in and all get along. But it might make it harder for you to outshine the other kids especially if you’re just starting out.
At the end of the day, less players usually means more profit for you.
So there you have it. Five tips to get you started on finding your own patch!