In today’s show we talk to Cherie Barber, from RenovatingForProfit.com.au and also a regular guest on The Living Room on Channel 10, about why some renovators become hugely successful with some skills they employ without even picking up a hammer. She also tells you why the internet is not a great tool to rely on when you are researching a property or market.
Kevin: One of the reasons why many people become very successful in property and through renovation is because they thoroughly research and understand the market before they purchase, not after they purchase. I know this is a topic that is near and dear to the heart of our next guest, Cherie Barber from RenovatingForProfit.com.au and also a regular guest on The Living Room on Channel 10.
Cherie, some of the techniques that you use that you’d like to highlight for us to make sure that we actually buy the right property at the right price?
Cherie: Wow, that’s a big one. It takes about two days to explain that in my workshop. Let me try and give you a couple of key tips first of all. One of the first things that I say to people before they actually rush out and buy a property… That is very tempting. A lot of the renovation shows on TV spur people into going out on the weekends and wanting to do a renovation, and they jump into it before doing the proper research.
I think the first thing is become an expert at the suburbs. You only have to spend about a week in a suburb, driving the streets, looking up suburb demographics online. There is so much suburb data on the Internet these days. It’s incredible. First of all, do your suburb due diligence. That will take a week or two to get a really good feel of the suburb.
Once you’ve done that, you need to then move to pricing due diligence. One of the big things is a lot of people do a lot of their pricing research via the computer these days. As you know, Kevin, you call that desktop valuation. It’s simply not enough, because all of those Internet reports are great tools but if that’s your sole mechanism for determining the value of a property, you’re in serious trouble, because none of those Internet online reports will tell you where the negative and positive price pockets are at a suburb level.
What I mean by that is that you can go into a suburb and some streets pull higher prices – and for no logical reason, you have other streets that historically have lower property value. What can also skew that is the location of infrastructure, like if you’re closer to the water, naturally, property prices are going to be higher. If you’re closer to the shops, property prices could be lower. You need to be going through properties, you need to be going through other people’s homes, and actually trying to work out some of this stuff yourself.
Kevin: As you said, those desktop valuations or the supplies of those don’t really keep up to date with the things that are happening in the area nor what is being renovated in the area. I’ve quite often seen houses put up as three-bedroom when in fact they are four-bedroom because they have been extended, Cherie. It makes a huge difference to the valuation of every property.
Cherie: It does. I’ve had a lot of conversations with valuers over the years. Obviously, I’m in the game of buying and selling or buying and renting properties for a living, so I deal with valuers a lot. When I finish a renovation, I call the valuers in to get it re-valued, so I can tap into the new increased equity so that I can go out and buy my next property.
I’ve always been having conversations with valuers about the values of property, and I can’t tell you how many times evaluations have come in low. You’re not having arguments, but you’re having heated debates with valuers saying, “Yes, but apples to apples, that property that you’re basing that figure on didn’t have this, it didn’t have this, it didn’t have that, and it was unrenovated. Mine is renovated.”
Valuers and people who do the desktop valuations – you’re right – they don’t have that insight to the condition of the property at the time of the sale. It can mean the difference between tens of thousands of dollars.
Kevin: That is a fantastic tip that you’ve given us there, because we have come to rely very much on the Internet to do our research, but you’re saying get on the ground and get that on-ground experience.
Cherie: The Internet is great, and I hate to say it, but the Internet has made us lazy. The good old-fashioned way, just go through people’s homes. It’s actually not a bad thing, because when you go through people’s homes trying to work out which properties sell higher for higher prices, which style is more in demand.
If you go to an open for inspection and buyers are swarming all over a beautiful federation house, probably in the suburbs, you go, “Maybe I should renovate my house more in a federation style as opposed to a more contemporary style.” You actually learn a lot about hitting the pavement.
At the same time, you also develop good relationships with the real estate agents, so they know that you’re a more serious person, you’re not a tire kicker. When they see you going through properties, they’re more likely to go, “I saw that person coming through the open for inspection. I might give them a call and let them know that this property is about to come on the market soon.”
I’ve sourced a lot of properties over the years just by being present at the open for inspections. There is a whole heap of benefits there that you can really do on researching a property.
Apart from that, I have a property due diligence checklist that I have developed for my students. In fact, what you may not realize, Kevin – you may have to do an episode on this one day – there are 60 things that you should research on a property before you sign that contract of sale. Can you believe it?
Kevin: Sixty things? Is that right?
Cherie: Sixty things. The good thing is the 60 things don’t actually take long to do. It takes my students about one and a half days or less to tick off every single thing. I can probably give you a couple of things now if you have time.
Kevin: Yes, please.
Cherie: For example, really basic stuff that people don’t think to research: my students when they buy a property will make a quick call to their council and say, “Can you tell me what the zoning of the property is? Can you tell me if this property is heritage listed? Can you tell me if the property is in a heritage and conservation zone?” That is different to heritage listings.
“Can you please tell me are there any tree preservation orders on this property? Can you tell me is this property in a bushfire-prone zone? Is there any land contamination that you are aware of? Has anybody tried to lodge any development applications on this property in the past with council? And more importantly, have any of the neighboring properties been approved for development?”
They’re just a small handful of quick questions that somebody can either phone council or walk into council, and that can uncover a lot about a property before you rush out and sign that contract.
Kevin: Yes, another great reason to make sure that you get into one of Cherie’s workshops. They go for two or three days, I think, don’t they, Cherie?
Cherie: Three long days. It takes me about three weeks to get over one, Kevin.
Kevin: They’re fantastic. You can get all the details at Cherie’s website, RenovatingForProfit.com.au, and pick up the free DVD while you’re there.
Cherie, always great talking to you. I look forward to seeing you on The Living Room and more importantly, having you back on the show again really soon. Thanks for your time.
Cherie: Anytime. Thank you, Kevin.