Reno shows don’t tell the full story

Reno shows don’t tell the full story

Patrick's interview on Real Estate Talk with Kevin Turner

Buyers agents tell us that they are getting enquiries from buyers motivated by the recent spate of TV Renovation Shows. Unfortunately they have an unrealistic view about renovating and making a profit. We get a good grounded view from two buyers agents who tell it as it is. Click here to listen to interview.

Full transcript:

Kevin Turner: You’ve heard us in the show talk about Buyers Agents from time to time. There’s a buyer’s agent in Sydney by the name of Patrick Bright who is a good friend of mine, we’ve had him on the show a number of times he’s written many, many books and is very knowledgeable about the market.  His company is EPS Property Search and I was taken by a comment he made the other day about shows on television may be misleading people about the cost of renovations.  He joins me.  Hi Patrick.

Patrick Bright: Hi Kevin

Kevin:  You’re a bit concerned that this could be giving the wrong message to renovators?

Patrick: Well, to the inexperienced people yes.  If you’ve done a renovation before you probably have a bit more knowledge of what’s going on but I’ve been fielding calls, questions and email enquiries from people...they’ve watched the block, they’ve watched the renovators show this year to name two of the major shows out there… and they’re excited about getting into a renovation and making a profit.  But what I’m concerned about is and when I speak to these people I explain to them, look they haven’t factored in the biggest cost of all which is labour and there’s other costs they’re not taking into consideration as well.  Holding costs, they’ve got stamp duty on the sale.  When you add up these costs no one on The Block made a profit and I predict none of The Renovators’ properties will make one either.

Kevin: I guess in a lot of these shows they also bring in experts and they don’t factor them in which is something that renovators wouldn’t do as well, which is I guess what you’re referring to.

Patrick: Not so much the experts, I mean you can get good advice out there and people do project manage renovations for people, it’s something that we do for people as well – that’s not a huge cost.  The big cost that they’re leaving out is labour and all these gifts.  I mean no one’s going to come along and give you a free swimming pool …worth forty or fifty grand.  No one’s going to come along and give you ten thousand dollars one week and thirty thousand dollars the next week just because you did a really nice room.  That’s all great and it’s great entertainment but it’s giving people a false sense of reality about what the costs are and what things really do cost to do because these projects that these guys are doing on these shows they involve council requirements, I mean there’s thousands of dollars there in DA application fees, architects fees, engineers costs for these walls they’re removing and beams they’re putting in.  They’re not showing that and that’s a bit of a flaw that I think they should show that and tell the full real story. 

Kevin:  So when someone rings you, one of your clients rings you and says they want to do this, what do you do? Do you give them a spreadsheet or do you give them a rundown on what the costs really are?

Patrick: Yes, we do.  We sit down with people and say look this is what the cost of a buy, renovate, sell or buy, renovate, hold project is. It is very, very difficult, by the way, to do a buy, renovate, sell project and walk away with a big chunk of cash. It’s not easy to do, it can be done (but) it’s not easy to do.  What most people do, and the switched on…investor will do is a buy, renovate, hold strategy because then you’re not dealing with all these extra costs of selling costs, which eat heavily into profit and sometimes wipe it out

Kevin:  Now Patrick, I believe you’ve got a book in the process due to come out later this year that might help renovators?

Patrick: I have, yes. I’ve been working on it for a while but I guess all these questions and shows have sparked me to get it finished.  It’s the Insider’s Guide to Renovating for Profit and in that book I explain (renovations) in detail.  I’ve got about ten case studies of real projects that we’ve done with all the numbers and all the tips and things that we’ve learnt over my 15, 20 years in real estate from a carpentry background through to being a Sales Agent and last over ten years being a Buyers Agent...

Kevin: That’s due out before Christmas?

Patrick: It’s due out in December... So it’s actually at the printers right now.

Kevin: That’s the Insider’s Guide to Renovating for Profit. Patrick is from a company called EPS Property Search.  They are Buyer’s Agents working out of Sydney. Patrick, once again thanks for your time. 

Patrick: Thanks Kevin.