To Sell Or Not To Sell After Renovating

Hi guys, Naomi Findlay here.  

Did you know I have a renovation course? You can check it out here! 

Ok, so you’ve worked out your patch. You’ve done all the research, sniffed out all the ins and outs. You’ve even picked out the perfect property. 

You know exactly what upgrades and other tinkerings you’ll be doing to that house. You even know who your ideal shoppers will be – the suburb is just ripe for Jenny and Bill and their two kids.  

And best of all, you’ve done all of this without letting anyone else tell you what you want. 

Great, so have you decided what you’re going to do when all the renovating is done?  

That’s what I’m here to talk about – today is all about how you’re going to manifest your hard-earned profit. 

Luckily, today’s list is also pretty short. There aren’t a million options for you to get lost in. There are actually, only two choices.  

But just because there’s only two, doesn’t mean you shouldn’t consider each one carefully.  

Why? Because remember all this talk before about finding your patch and your personal strategy and it’s all about what works best for you? 

Well, it’s the same principle here. Again, it’s all about you and what will work best for you.  

So, let’s jump straight in. 

Don’t have time to watch? Listen on-the-go! 

Number one: sell, sell sell! 

The first option is to sell. Pretty obvious. You buy a place, renovate it, and then sell as soon as humanly possible. Simple.  

This is what you probably think of when you hear the words “house flipping”. If you don’t flip a pancake in time, it will burn. Same thing with house renovations. If you leave it in your possession for too long without doing anything with it, those sneaky mortgage repayments will burn into your potential profits. 

So you sell and you flip. Boom! Profits realised for your next project. 

Selling is great because it lets you see your profits almost immediately. There’s no slow release, or drip feeding involved. And that’s pretty handy if you want to jump straight into another reno.  

It’s also nice to receive that sum in bulk – it’s great at boosting your motivation after all that hard work.  

Apart from the obvious quick release of profit, there are other benefits to selling straight after a renovation. 

For one, all your upgrades and polishes will be fresh; that new oven will be shiny; the cupboards all sleek and soft-closing; the walls a perfect off-white, not a marking in sight. 

This way, Jenny and Bill will walk through the place and think, “wow, it’s brand new, just for us”.  And that’s the exact reaction you want.  

The other great thing about selling straight away is that you’ll probably sell in the same market. This is especially handy if that market is hot, hot. If you have a whole group of Jenny and Bill-think-a-likes, you’ll end up with all of them bidding at the auction and keen to secure their piece of perfection. And for you that will mean more profits, yay! 

You should also consider the business aspect of it. The more assets you have in a business, generally, the more risk that is involved. Getting rid of some of those assets will help reduce that risk and in turn, reduce the stress and time of having to look after it all.  

Selling your renovation project will do exactly that. Particularly if you’re doing renovations on the side, it will help to not be burnt out by that side business.  

Plenty of pros, right? 

But what about the downsides to an immediate house flip? 

Well, the first one is the money involved. Putting the house up for sale, paying for agent’s fees, and then paying your lawyer to do the paperwork all costs money. As does giving the government their share of the sale – remember to ask your trusty accountant about these costs, which can all add up. 

The other thing you have to keep in mind is that if the market you’re in at the moment isn’t all hot potato, the Jennys and Bills out there might not be as willing to part with their cash, or with as much of it as you would like to see. 

Alright, onto the second option. 

Number two: rent! 

If you choose to keep the property, then obviously you would still want it making you money. Especially now that you’ve put in all the work to make it awesome. 

So the simple solution to that is to rent it out.  

One of the perks of this option is that you get a constant stream of money coming in. That’s a great way of making sure your own bills are paid for. You also don’t have to pay an agent any hefty fees for selling the place.  

The biggest perk, though, is that you get to use the equity that you created with your awesome renovations to buy your next project. So, although you don’t physically see that big lump of cash, it’s there for you to use on other properties. And there’s no need to pay a huge part of it toward CGT, because you haven’t actually sold the place. 

Pretty great, huh? 

So, what’s not so great about this renting option? 

Well, I think the most annoying one is that nothing stays new forever. Eventually, depending on how long you hold the property of course, you will probably have to give it some more touch-ups.  

That’s just the nature of owning a property. Those flawless floorboards will eventually get scratched up and fade a little; the walls will show signs of normal day-to-day living with marks and dints here and there; and that shiny state-of-the-art oven will no longer be state-of-the-art when newer models come out.  

In terms of capital, nobody can see into the future. So it can be hard to see how long it will take for the property to grow in value, or when it will be worth selling. 

And what if the rental demand drops and you have to lower the rent? Are you going to have enough to service the loan? 

The other thing is that, although there aren’t any big selling fees, if you have an agent managing the property, a small part of the rental income will disappear. I’m not recommending you save this money by self-managing, because that would probably drive you insane. But it is something to think about when weighing up the two options.  

So, having all that information now, which option would you choose? 

Are you going to go for the house flip?  

Or would you rather rent your project out for the time being? 

It all depends on what suits you and your lifestyle. 

Selling PROPERTY? get more of naomi’s top tips here!