7 TIPS ON

HOW TO BE A
SUCCESSFUL
PROPERTY
RENOVATOR

By Janet Xuccoa BCom LLB

ph: +64 9 522 7955 | www.gra.co.nz

A LITTLE ABOUT THE AUTHOR

Janet Xuccoa BCom LLB

Janet is a partner at Gilligan Rowe & Associates LP where she

leads the Professional Trustee division of the practice in assisting
clients, trustees and company directors in various matters that
confront them. Apart from this role, she spearheads GRA Money
School and is instrumental in marketing for the firm.

Over the years, Janet has written numerous articles for different
publications including the New Zealand Property magazine, the
Investor magazine, Verve magazine and Business to Business
newspaper. She has also contributed to a number of prominent
websites and electronic newsletters.

Janet holds degrees in accounting and law and is a well-known

author with best sellers Money Secrets 101 and Family Trusts
101. When she isn’t working you’ll find Janet presenting on a variety of money and
trustee subjects, mixing her experience and humour to make her points and entertain her
audiences. She also presents at events held by property groups, Chambers of Commerce,
retailers’ associations, women’s groups, banking institutions, corporate and management
organisations and as a keynote speaker at events such as Thrive and Vibe. When not
working, she enjoys keeping fit, travelling, scuba diving, antiques, art, and crime movies.

ph: +64 9 522 7955 | EMAIL: info@gra.co.nz | www.gra.co.nz

Most of us know property is a great way to boost our balance sheets and bank balances. If you’re
a Kiwi, you’d have been brought up on the wealth recipe - buy a property, renovate, increase your
wealth, repeat. But just as easily as renovations can add credits to our bank balances, so can they be
debit money crashers. To help you avoid this state of affairs, read on for our tips.

TIP 1
Ask yourself – what am I trying to achieve? Are you doing up the property so you can earn
a higher rental income from it or are you renovating so you can gain a higher sale price?
If it’s the first objective, “maintenance free” is what you will be trying to achieve. If it’s the
latter, “buyer appeal” will be your goal.

Clarifying your purpose and desired outcomes will help you decide exactly what to spend
your money on. Making clear upfront determinations avoids making Johnny-on-the-spot
decisions which in turn, assists you in avoiding budget blowouts.

If you’re renovating to attract a better quality tenant and achieve a higher rental, one of
the first things you should do is look at other rental properties in the suburb your property
is situated in. You want to ascertain what the standard of these properties are. This will give you a good indication
of what tenants in that suburb expect in a home they are renting. Whilst you want to create a nice environment
for prospective tenants, it makes no sense to over-improve a property. You won’t achieve a higher rental by
overcapitalising your property, as the suburb usually dictates the level of rent you can charge. Your aim is to make a
lasting, pleasant, maintenance-free space for your tenants to enjoy living in without incurring exorbitant costs.

If your aim of renovating is to increase the sale price of the property when selling, you need to spend your dollars
only on renovations that add significant value to your home. To decide what renovations to make, you need to visit
open homes in the suburb your house is situated in. Find out what home buyers are expecting and wanting. These
are two different things. Talk to real estate agents. They usually possess a gold mine of information and know what
attracts buyers. There will be some things that are absolute essentials and some things that will be on the majority of
purchasers’ wish lists. To achieve a top dollar sales price, you’ll need to renovate to buyers’ benchmarks and hit some
of the points on their wish lists.

TIP 2
What you spend your money on and how much money you spend renovating
your property, will depend largely on your objective.

If you’re renovating for rental purposes, low maintenance will be an objective

high on your list. You want the property to be inviting and livable and at
the same time, require as little maintenance as possible. This means your
renovations should be fuss free – that is not a lot of maintenance is required
other than cleaning by the tenants. In particular, look at putting in limited
maintenance gardens, kitchens with laminated bench tops and wipe down
cupboards, ventilation, enclosed showers and vinyl floor coverings. Talk to
property managers in the area to see what tenants most want in a property in
your particular suburb and what provides the least amount of upkeep.

If you’re renovating for re-sale purposes, your first port of call must be a quick chat with a couple of high selling real
estate agents and a valuer or two. The information these people can give you will be imperative to achieving your
objective of realising the highest sale price possible. They’ll be able to tell you what makes a house appealing to
potential buyers and what increases the value of a property.

Try hard to keep your renovations in keeping with the house and neighborhood. Ensure your color schemes in the
house are neutral. That way, your property will appeal to a wide range of people. In particular, concentrate on kitchens
and bathrooms. Don’t over splurge on high-end appliances and fixtures and fittings. Often these don’t add any more
value to a home than medium price devices. And because Kiwis love to be outside, consider putting in decking and
landscaping. These items are frequently inexpensive but add enormous appeal to a property.

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 TIP 3
Now you’re armed with information, you need to work out a budget. Realistically, what
will your intended renovations cost you? To find this out, obtain 3 quotes from reputable
tradespeople. Ask friends and home centers for tradespeople recommendations. Allow
plenty of time to get quotes in.

With respect to obtaining quotes for labour, you’re likely to find you get what you pay for
when it comes down to tradespeople. If you think it’s expensive to use an experienced
qualified tradesperson to complete your renovations, just wait until you hire the hammer
monkey.

Once you’ve obtained quotes, complete them. Ensure you are comparing apples with
apples. Some quotes may be incomplete. Note also the cheapest quote isn’t always the
best and the highest quote won’t necessarily mean your renovation project proceeds trouble free.

Once you’ve selected your quotes, remember to build in a buffer of say 15% of the total cost just in case you over-run
on your spend. If when calculating your total intended spend you think your renovations aren’t within your budget,
look at ways to scale back the spend. Perhaps you need to change your ideas or substitute the materials you intend
to use.

Once you’ve set your budget, ensure you stick to your limit. Don’t fall into the trap of thinking I’ll spend an extra 8% in
the kitchen and will save 14% when I come to renovating the bathroom. Far better to do an even renovation entirely
throughout a property than a great job in one room and a shoddy job in another.

Budget software such as GRA’s Life Online programme (www.lifeonline.co.nz) can help you track where your dollars
are being spent and ensure you come right in on budget at the end of your renovation project. The images below show
how Life Online can make renovating properties that much easier.

LIFE ONLINE RENOVATION CALCULATOR

Step 1: Enter Purchase Price and Selling Price

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 Step 2: Enter Projected Renovation Costs

Step 3: Enter Tax and Interest Rate

Gross Profit $55,000

Total Indirect Costs $15,683

Less Income Tax (Rate 30%) $9,960

Projected Net Profit After Tax $23,239

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 TIP 4
Most renovations involve a tradesperson or five and the ease of your renovation project will depend
largely upon these people. This means you need to wisely choose who you’re going to let loose
on your property. Obtain recommendations from friends. Just understand that your friends’
projects and expectations may well differ from yours. Another great source of referrals are
brands. For example, ask Resene for a list of painters and plasterers that they recommend.
Once you’ve found tradespeople, check their credentials. Are they bona fide? What is
their real experience? Ask for testimonials from their previous clients. What you’re trying to
ascertain is whether they will complete your renovations to an acceptable standard of work, in a
timely manner.

To assist your tradespeople, communicate with them clearly. The picture you may have in your
head could be entirely different from what your tradesperson thinks is appropriate. A picture
speaks a thousand words and can eliminate miscommunications. Draw diagrams of where things
like shower fittings need to go and pin the diagrams to the wall.

Everyone wants their renovations to be finished quickly. To achieve this objective, you’ll need to constantly talk to
your tradespeople. Daily monitor what they’ve done and enquire what they’re intending to complete tomorrow. Try to
pre-empt issues that may arise. If a problem does occur, stay on top of it. Note it’s your tradesperson who is likely to
fix the issue for you. For this reason, you’ll need to ensure you don’t lose your rag and alienate them. Communicate
clearly, in a friendly, co-operative, reasonable manner, with a view to solving the problem. Good people management is
the key when working with tradespeople. Get this right and your renovations will go relatively smoothly.

TIP 5

Great tradespeople won’t be a substitute for inferior products. It’s vital you use
products that are fit for the purpose of your renovations and the market you are trying
to attract. For instance, if you’re intending to rent out the property after you have
renovated, ensure you use good quality paint that is easily wiped down. Remember
maintenance free is what you’re aiming for. If on the other hand, you’re planning on
selling after you’ve completed your bathroom renovations, put in good quality fittings.
It’s top dollar sales price you’re trying to achieve and desirable fixtures and fittings may
be just the ticket to attract the buyer you need.

To assist you in choosing your products, talk to your tradespeople. Use their experience
to tell you what products work well and what don’t.

Whilst you want to be mindful of the saying ‘cheap can be expensive’, you don’t want to pay over-the-top prices for
products. Shop around. Use sites such as Google and Trade Me for researching and buying purposes. Bargain
at your local building centres for a cash concession on products. Ask your tradespeople if you can use their shop
accounts to access trade discounts.

If you’re using your tradespeople’s accounts, ensure you keep copies of what you’ve ordered and how much these
products are going to cost you. You may need this information at a later date when your tradesperson invoices you.

If you’ve paid cash for products, take delivery immediately. If the shop goes into liquidation, your products could be
held back by the liquidators which will delay your renovation project from being finished on time.

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 TIP 6
The achievement of your objectives and the overall success of your renovation
project will depend largely upon your planning. This step includes sequencing
and co-coordinating. Ensure you know the process to be followed, the order
of jobs to be done and the tradespeople you need to do the work. Check your
tradespeople are available when you need them. Fail to adequately plan and
your renovation project will cost you more money than you budgeted for and
take longer than you expected to finish.

TIP 7
Legalese - compliance in other words - will be your responsibility. Frequently when carrying out
renovations, specific laws must be followed. For example, you’ll need to obtain consents and
permits for many renovation works such as installing plumbing and building retaining walls.
You may even need to obtain the approval of your neighbours for your intended works.

Ensure you personally check with your local council what consents and permits are going
to be required for the renovations you intend to carry out. Ignorance of your legal
responsibilities and duties will be absolutely no excuse in the eyes of the law.
Disregard the council at your peril. They can make your life a living emotional,
financial nightmare. Don’t assume your tradespeople will know what consents and
permits are required either. Your property. Your problem. Fullstop!

Regardless of the council’s displeasure, fail to obtain the necessary legal signoffs and you can suffer some serious
negative consequences. Insurance policies may become invalid. Resale value will undoubtedly be affected too if you
don’t have all the necessary paperwork in place. Do your homework. It will stand you in good stead.

SUMMARY
Renovating without incurring frustration and budget overruns requires you to understand what needs to be done,
when it needs to be done and by whom. Additionally, you need to be involved in the actual management of the
renovation project and the tradespeople concerned. Overall, you’re likely to need time and to be organised and flexible
and possess a range of skills such as the ability to research, plan, budget, communicate and make lots of decisions.
Having some experience in building undoubtedly goes a long way too.

When you think about your renovation project you might consider it more time efficient and overall less expensive, to
employ a renovations project manager. These people can be worth their weight in gold. Overall the fee they’ll charge
you can be paid for by the time and money they actually save you.

Irrespective of whether you decide to embark on a DIY renovations project or call in a project manager, have a quick
look over the attached questionnaire. It should help you consider things in more detail. Additionally call in at Gilligan
Rowe & Associates. We’ll look over your structures, accounting and tax issues to ensure you’re completing your
renovations in the best possible entity for you.

Finally, remember the achievement of projects in life should be celebrated. Don’t forget to rejoice when the builders
have left, the renovations are completed and you’ve just increased your wealth.

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 RENOVATIONS QUESTIONNAIRE

1. Why are you going to renovate this particular property?

2. What are you hoping to achieve?

3. What specific things will you do to complete the renovation?

4. Who will do the renovation?

5. What constraints will you have to deal with?

6. How much will you spend?

7. What do you expect to get back by completing the renovation?

Please note the purpose of the above questions is to get you to think about your renovation project before you
begin it. These questions are by no means a complete list of all matters you should consider. Professional,
qualified advice regarding all renovations, irrespective of how big or small the project is, should always be taken
prior to the commencement of any work.

Visit us at www.gra.co.nz