The hidden cost of renovating

Now is certainly a good time to add value to your property, particularly for investors who are looking to manufacture equity and increase their rental returns allowing them to add to their property portfolio sooner rather than later.

If you’re going to renovate then the first decision to be made is if you are going to manage this process yourself or engage a project manager. If you decide to go it alone rather than hiring an experienced project manager then you need to make sure you’re prepared. Here are a few tips to make sure you start the project with a realistic outlook:

To start with you should budget in the time that the renovations will take to complete. You do need to put a value on your time and the easiest way is to do this is to work out your current hourly rate and multiply it by the estimated hours it will take you to manage the renovation as you won’t be able to do it all on the weekends. Be prepared to spend some serious hours on the road chasing carpets, tiles, tap ware, light fittings, paint etc, as well as spending time on the phone sourcing trades people and obtaining quotes. Sure you can do some research over the internet however from my experience there is no substitute for seeing and touching the fixtures and fittings in person as quite often the decision to go with something else ends up being the result particularly with tiles and carpet.

Once you start the project the next hurdle is the access and timing of the tradespeople. One of the biggest challenges is working out who follows who as you don't want the tiles down before all the plumbing is in or to find out the vanity unit you want is out of stock so the space left for it no longer works.

Failing to lock in a particular tradesperson to promptly follow another can hold up all other aspects of the renovation for days which often rolls into weeks. For investors, time really does equal money as there’ll be no rental income while the renovations are underway and I have witnessed the projects of DIY renovators which have taken 12 weeks to do what could have been achieved in under six. At $750pw rent that's an additional $4,500 alone.

Other problems that you are likely to encounter include delays in sourcing necessary materials, bad weather or finding out that you need to replace plumbing or wiring that wasn’t budgeted for. While you can’t always avoid all of these situations (after all you can’t control the weather), you can plan and allow for most of them.