Hey guys, it’s Naomi Findlay here! I’m back for more rapid renovation tips.
When it comes to renovating for wealth, you want it to be quick, easy and painless. You want to buy low and sell high – and not have to wait around to find your perfect buyer.
To be able to do this, you need to know who your potential buyer is, before you even begin to renovate.
Does that sound easy?
Or are you now wondering how to pinpoint your potential buyers?
Are you stuck on trying to work out what sort of upgrades those buyers would want?
Or is your own personal attachment getting in the way of all of this?
Last time I spoke about the things you should be looking out for before signing any binding documents or handing over your hard-earned cash.
This time, it’s all about your market.
What is a target market?
Simply put, it’s a special group of people that you have decided to point your bow and arrow at. Think of them as the bullseye; if you hit your ideal market, you will get your ideal profit.
Now, I have mentioned the word “market” a fair few times up until this point. It was either Dave the young bachelor, or Sue and Drew and their kids, or Jill and Phil.
Whatever their names, all of these were examples of people who would potentially be interested in your project once you put it up for sale.
So how do go about figuring out who’s going to want to buy your property?
If you have already been busy sorting through leads, you should have some sort of idea of your ideal buyer.
If you are looking at one bedroom apartments, it will generally be a single or younger couple. If it’s a three-bedroom duplex it might be a young family with a newborn.
You don’t have to know exactly what they look like, or how old they are, or what they like to do in their spare time. But you want to have a pretty clear idea of who you’re going to sell to.
A vague idea of your target market is not enough to reach your maximum wealth.
Otherwise, you can end up with a house that falls through the gaps because neither the lone bachelor nor the growing family thinks it’s quite the right buy for them.
Think about it as a product your business is offering. If you try to sell that product to everybody, it would be a huge waste of time and effort.
No one is interested in everything.
On the other hand, if you aim for a particular group of people, you can reach potential buyers by customising your product to suit them.
The property you buy to renovate is your product. So, you need to tailor it to suit this target market of yours.
And remember that, although you are shaping the renovation to fit your potential buyers, you are still holding the reigns at the end of the day.
So, you need to still look at it from your perspective and your vision. Make sure that the renovation aligns with your goals. Don’t fall into the trap of listening to other people tell you what they think your target market will want.
You are the one who’s done the most research, so you are the best placed to be making the big decisions.
Ok, so now we have that out of the way.
How do you go about narrowing your target market?
You know how I said earlier that you don’t need to know the exact age of your potential buyers? Well, that’s true.
But you DO need to have a vague idea to be able to narrow your shot to hit the bullseye.
There’s no use telling yourself that this four-bedroom property is so versatile that it would be perfect for any adult between the age of 25 and 65. That’s a very large number to work with, and will make trying to renovate to suit that variation a very stressful experience.
Think about it from your own point of view. If you are 35-years-old now with young kids, what kind of place do you call or want to call home now? And how is that different from 10 years ago? If you didn’t have kids back then, did you need the space that you want or have now? And again, how is this going to be different in another 15 years time when the kids finish high school and leave the nest? Will you need all that space or those good schools just around the corner?
Your needs and wants change with the stages of life. And just like yours, so will your potential buyers’ lives change.
Of course, not everybody will have young families in their mid-thirties, or be retiring in their sixties. But these are the exception.
This general “demographic”, as it’s also called, will help you pinpoint those who ARE starting families and retiring or living the young bachelor lifestyle.
And knowing that demographic will help set you on the right path to achieving your wealth goals.
BUT, before you rush into your renovations based on this information, note this:
Your target market is NOT the same as your demographic.
Sure, these two things are closely related. You should definitely know your demographic to help you figure out your target market. But your demographic is not the be-all-and-end-all of that research.
The demographic information is definitely important because it can show you the age, gender, marriage status and even the race and income of potential buyers. This info will help you work out that Jill and Phil are a married couple in their early thirties with two small kids. They’re both full-time professionals – Jill is an optometrist and Phil is an accountant, and are of Vietnamese heritage.
But where your demographic information will focus on the age, gender and marriage status of potential buyers, your target market will look more broadly at things like geography and lifestyle. Is the house located in a young family neighbourhood? Are the neighbours also young families? Is the house close to good schools and are there plenty of child care centres in the area? Does the area have good public transport options so Phil can easily commute to work? Is there a lock-up garage that can fit their new Mercedes four-wheel-drive? Is the backyard big enough for their two cocker spaniels?
All of these things put together can help you work out whether they would want to live in that 3-bedroom house that you are planning on renovating for wealth.
So, how do you find out all of this important information about your potential buyers?
Remember a few blog posts ago I talked about becoming your own property expert? In that post I spoke about the two main steps you needed to become that pro.
If you already did these two things, finding out all the details about your target market should be a breeze.
1. The first was about finding yourself some real estate agent buddies.
Your real estate buddies (both the real people and the online databases like realestate.com.au) are super good at showing you other similar properties that have recently been sold. They can tell you who bought as well as who was looking to buy.
2. The second was about going to home inspections.
If you have been going to inspections, you probably haven’t been the only one looking. You should always keep an eye on who the other inspectors are, because a lot of them will be YOUR target market. It might sound a little stalker-ish, but if you observe and record this info, you will be well on your way to pinpointing your perfect buyers.
So, that’s it. Once you have your ideal buyer figured out, you can be on your way to renovating for wealth!