We all love the idea of renovating to make income, and maybe you have thought about jumping into the renovating game, but haven’t had enough borrowing power, time or just wanted someone to share the journey with. If so, then a Property Circle could be exactly what you are looking for because with My Property Circles you can pool your resources with others and share the risk and the reward.
As conditions in Australia’s property market continue to tighten, many renovators are looking to Invest using a Property Circle to get their foot on the ladder. Teaming up with another’s and purchasing property together can be the way to do something now and however big or small your share in it, it can be leveraged later down the track. A carefully considered renovation is one of the easiest ways to make money from property, but it requires well-calculated planning and a premediated strategy to do it successfully. There is no “one size fits all” approach to doing a renovation for profit, but there are a few pointers to remember when considering this.
1. Find team members that can complement your skills
Now, let’s be frank: renovating a house is no sit-down job – is a time-consuming activity. Not to mention the technical knowledge and research needed to become a seasoned and successful flipper. So, aside from your plan, we recommend you seek professional advice before you try your hand at making money through flipping houses. Having a friend, family member or helping hand can make all the difference. Consider teaming up with at least one other person who can contribute to the elements you are missing. They may be able to bring the skills or knowledge you’re missing and reduce the costs of labour you may have spent if you had done it yourself.
2. Ensure a watertight legal structure
Once this is out of the way, make sure you have a watertight legal structure, so you and your Circle members have peace of mind when it comes to the financial investment, ensuring personal problems don’t muddy the water. My Property Circles will be able to give you the necessary legal documents to help set up and manage your Property Circle including Unit Holder Agreement, Shareholder Agreement. But you should also discuss your finances with an accountant and perhaps your lawyer, to avoid any legal issues along the way. This is the best way to protect you and your circle members.
3. Preparation is key!
Decide timeframes, budgets, roles, and responsibilities up front and stick to it. You should also consider if you and your Property Circle members have Capacity for an 80% LVR loan for the property you are planning to renovate, and if you all have enough Cash/Equity to fund the renovation, deposit & transactional costs (Minimum 30% property value). You don’t want to be stuck in a situation where you’re financially unprepared, holding a property and paying interest on your loan with limited capacity to do so.
Speaking of budgets, you should try and be realistic and consider the possibility of going over the budget. The truth is that the reno will usually cost you more than you expect and take longer than you planned. Budget blowouts are all too common, so maybe don’t expect the renovation costs to be as perfect as you see on those renovation TV Shows. Figure out what you can afford, and do your research, in the end if you need to move money to accommodate certain costly tasks, perhaps that lavish kitchen can be downsized.
4. Strategise your battle plan & don’t rush
The next important step is to not rush into things! Before getting ahead of yourselves, you should research the market and create a timeline for the project. Knowing your Strategy is the fundamental step to success. Ask yourself: are you looking for projects that will give you maximum return for the minimum amount of time, getting in and out quickly and use the profits for your next renovation project? Maybe talk to some people who have been in this game longer than you, ask for some strategy tips and figure out your battle plan before you buy.
So, what are you waiting for find someone with the same passion for renovating and start a Property Circle, we will provide you with a trusted structure and surround you with experts, well versed in property investing with others ready to guide you throughout the entire investment process?
Read about our first ever Renovation Circle’s success story about how they made $100,000 in less than 3 months? Click here