Episode 190 | Flipping & Renovating Properties | Rebeka Morgan, BuildHer Collective

How do you flip properties and is it still profitable?
We talk to Rebeka Morgan, co-founder of the BuildHer Collective and CEO of Beirin Projects which focuses on high-end renovation and construction in Melbourne’s inner North. Rebekah worked for 14 years in construction management before becoming a developer herself and is passionate about sharing knowledge and experience, both as a tutor at Swinburne University and through the courses and events run by the BuildHer Collective.

BuildHer Collective has a huge reach and audience with hundreds of thousands of followers, their influence has transformed lives and properties. This episode is dedicated to our audience who have constructions or renovations currently in the works or being planned out. We tap on all the relevant ways to make the most of your skills and execute a successful build.

RELEVANT EPISODES:
Episode 163 | Smart Houses: Fad or Necessity? | Brett Savill
Episode 109 | Expert Property Styling Secrets & Tricks that sell | Amy Stead
Episode 106 | Dodgy developers & Strata Living | Jimmy Thomson

GUEST LINKS:
BuildHer Collective - Resources
Facebook - BuildHer Collective
Instagram - BuildHer Collective
Pinterest - BuildHer Collective
Instagram - Beirin Projects

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: https://linktr.ee/veronicamorgan

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

Send in your questions to: questions@theelephantintheroom.com.au

EPISODE TRANSCRIPT:
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded in July 2021.

Veronica Morgan: What is the secret to renovating without blowing the budget. And overcapitalizing how lucrative is flipping property, really? Where do most inexperienced renovators go wrong?

Veronica Morgan: Welcome to the elephant in the room. This is the podcast where we love to talk about the big things in property that never usually get talked about. I'm Veronica Morgan, real estate agent buyer's agent co-host of Foxtel's location, location, location, Australia, and author of auction ready.

Chris Bates: And I'm Chris Bates mortgage broker. Before we get started, I need to let you know that nothing we say on here can be taken as personal advice. We always recommend you engage with the services of a professional.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website, as well as download our free, full forecast to report, which experts can you trust to get it right? The elephant in the room.com did I use

Veronica Morgan: There's a certain romance. If you like attached to the idea of renovating, which is encouraged by a whole genre of TV shows and celebrity flippers, but deep down, surely we must all know it's not as easy as it looks on the ground. I've seen some renovations go horribly wrong. As people underestimate the costs, overestimate their abilities and create a finished product that falls flat with buyers. I've also seen some hugely successful renovations, which begs the question. What did they know that the others didn't today? We're going to learn some of those secrets as we talk to Rebecca Morgan, no relative co-founder of build her collective. And CEO is a beer and projects, barren projects, which focuses on high end renovation and construction in Melbourne's inner north. And Rebecca is waived for 14 years in construction management before becoming a developer herself and is passionate about sharing knowledge and experience both as a tutor at Swinburne university and through the courses and events run by build her collective welcome, Rebecca, we very keen to gain an understanding of what it takes to build and renovate successfully.

Rebeka Morgan: Ah, thank you. Ruining her and Chris, thank you for having this Rebecca.

Chris Bates: Great to have you on, I guess I hate to be stereotypical, but you know, the construction industry, the property industry is very blokey and all about, you know, men, how how'd you sort of pave your way and we'll get you started in this construction industry and sort of make it your own. Yeah,

Rebeka Morgan: I mean, I have always loved construction and actually I find that women have a really sense of what they want to home to look like. So I'm a registered builder. So that probably makes it a little bit easier for me than say other people when they're renovating, but we all start somewhere, I guess, to me, the difference between someone who thinks they can do it, but it doesn't come off. And someone who, who can pull it off is learning and kind of taking, you know, listening to podcasts like yours, taking all the information around them and kind of distilling that into a product and realizing that when you're renovating a house, there's, there's a lot of moving factors and you've got to have that flexibility. I

Chris Bates: Know a little bit about builder, but our listeners might not, or some of them do. So I might not, but give us a bit of an elevator pitch. What's what's been happening there. Yeah.

Rebeka Morgan: Sorry. So build her collective is a business that we run. It's basically an online course to help you renovate or build your own home. We set it up because we were having, you know, crashing and I both worked in the construction industry. I mean, we ultimately set it up because we were drinking wine in Italy and has every good idea, but we had people coming to us and they were having big issues. And from our outside point of view, we could see that it actually, wasn't always a builder's fault and the problem was happening earlier. And these people were really smart. Like they were top of their field lawyers, solicitors accountants, lots of really intelligent people, but it seemed that when it came to running a renovation or building their own home, they were just stuck like clueless. But I don't know why, but in Australia we have this kind of feeling that we should be able to it's like given right. That we can kind of turn up to site and renovate our house. And that should be something we can do, which should all be able to kind of, you know, cut the timber and throw up a stud. Right. Right. And, and as women, we should all be able to decorate it perfectly. And it extends to, or before that even it's, we all just think as our God given right. To know how to buy property or buy ourselves knowing anything. So it's the same problem.

Chris Bates: What are some of the big things that you mentioned though, like you saw these mistakes that they were making, like Ronica sort of alluded to some of my paranoid fears at the moment, doing a big Reno, like am I going to overcapitalize? Is it going to hit the market? When I try to sell is my style, what that market's going to want? You know? So you can easily make a lot of mistakes, right? Overspend, you know, you know, waste money, make mistakes. What were some of the B ones you saw that people were making where you thought you just didn't need to do that, that you could have saved yourself a hell of a lot of money or you've just missed a big opportunity. Yeah.

Rebeka Morgan: Well, there's kind of two camps. So there's some people that are doing it for their own homes. I built her, started with people who are doing it for their own home, but obviously we would develop for profit. And so, you know, it didn't take too long before people were like, well, how do we do that? That's actually what we want to do. We love, can you teach us that? And I'm like, oh yeah, I guess I've done a lot of learning about it. And, and you guys, you know, like we all know our little secret sauce, so there's a whole heap of things that go into that, you know, it's the same as when you're buying a property, I guess starting with buying a property is really great.

Rebeka Morgan: Yeah. It gets the mark or it doesn't hit the mark.

Veronica Morgan: Yeah. And also it's not all properties deserve to be renovated. So yeah. So I think that what I see a mistake that people just assume that, or particularly if they're at a low price point, they just buy the cheapest thing that I can find. And often that's a reason it's sat there unrenovated for years and years and years is because it, the cost to renovate and the actual benefit the at the end result is just not going to be worth it. So nobody actually does it. But, you know, I think a lot of people, when they're looking specifically to renovate, a lot of people are starry-eyed about that. But do you think it's actually possible to properly cost a renovation before we buy a property?

Rebeka Morgan: Yeah. And that look, that's an interesting thing. So when we're renovating, especially for profit, there's a few unknowns. We never know what we're going to buy for. We can kind of guess it or estimate what we're willing to spend, but we never know really where we're going to sit until we actually purchase it. Then we've got what we're going to do with it and the construction price. So how much it's going to cost that. And there's a various ways that we can work that out, but we're all still making assumptions and estimates. We have to, because there's no way to know what to build costs until after you've spent all that money. And finally, we know that what you sell a house for is not fixed. It's not like a car that you can, you know, roll out and they're worth X amount of dollars. You can shop around, maybe get a couple of grand off. It's what someone's willing to pay on the day.

Veronica Morgan: Yeah. And there's market forces as well. I mean, you know, because obviously renovating a building takes time and the conditions, the market conditions at the time you start that build, and those that are in play at the end of that build can be vastly different luck, plays a huge part in that, but they don't tend to stay constant. And you know, and what I see in a rising market, there's people just sort of, they factor in their profit is, is basically in price rises. It's not actually in, you know, it's not really profit either.

Rebeka Morgan: No, there's a thing. Sometimes we say people they'll come to us and they'll go, oh, look, these houses made a profit of a million dollars. That's really good. How long have you had it 10 years? And I'm not sorry, this is the thing we need to do is when we're, we're factoring how much money we've made out of a renovation, you can actually only ever take an estimate of value at the time you started, right. It's about the value that renovation. It's not the value that lands gained in the interim.

Chris Bates: Hmm. That's a massive point because you know, you look at the, just renovating versus not renovating. You'd always assume all we should just renovate it, et cetera. But sometimes if you just hold this older house, it's rentable, you get all the market growth. You don't have any, the risk of renovation. The renovation gets old as well. You know, it loses value pretty much the day that you do it. So sometimes it's best just to let it sit there. And it's always tempting to renovate your investment properties, but it's actually sometimes best just to leave them there because unless you need to manufacture equity because the market does potentially a lot of the heavy lifting,

Rebeka Morgan: Different strategies out there. And I guess it all starts with understanding the game and understanding your numbers and kind of understanding what your ultimate outcomes are. And this is really tricky because it changes over time with our family circumstances changing over time. So we normally go into buying a property with an idea of what we want to do with it, right. That idea then develops over time unless you're doing kind of quick, quick flip. And when I say flip, I just want to clarify this because developing and it's kind of a dirty word or can be a dirty word, but it doesn't have to be traditionally. We think of flipping property is we go in, we tied it up. We might paint some tiles, do a, this possible renovation and then put it on the market again. But it's a different time to say 20 years ago, when that may have worked, a, all of our aspirations are higher.

Rebeka Morgan: Like we, we see so much inspiration all the time. We want more as consumers, but we're also more savvy. It doesn't take long to look at what you bought it for and what the condition of the property was. And then they're going to do a quick calculation. Yeah. And I've heard you guys do this as well. Like it's like, oh, that renovation would have cost about that much. Yeah. And buyers are doing this all the time. Like, oh, they spent 200 grand on that renovation. They're not going to factoring holding costs. They're not going to factoring stamp duty settlement sales costs. And they going to want to spend what they think is fair for that person to make. That's funny, that's in a normal market, in a rising market. Doesn't matter that it runs out the window. Yeah. Now people are buying all types of things.

Veronica Morgan: It's an interesting sort of nuance there that the buyer will spend what they think is a fair profit. And, and when there's, there's time to make these decisions and when there's more power in the buyer's hands, that's exactly what buyers do. That's quite a funny observation,

Chris Bates: Right? It is. Isn't it recon was trying to borrow his property or the couple, actually one in sunshine coast just a few weeks ago. And I'm like, wow, that's a big price. It's nice for an hour. You know, got the poor, the gas and it's good location. You know, I started jumping into RP data and I look at some old photos and I'm like, actually, I haven't done it right. Rhino. And it's like, you know, over double what it was a few years ago. And I'm thinking it was the rhino that done a lot of the price gain. And I'm like, actually all they've really done is moved that and put a new door on there. Like, oh God, this person's going to make a mater. If they sell it, our client didn't buy it in the end because of just the hate and potentially the road it was on. But like, I was just like, sometimes you can easily think it's the rent that's causing the price guy, but a lot of it is just the market. You know what I mean? It wasn't the Renno that's you know, unless you do those background checks,

Rebeka Morgan: You can't predict it. Right. So at the no lockdown, you know, maybe say February, March, last year, everyone was terrified. So like we we'd bought some stock, I'm sure you bought stock for people as well. And you know, we were sitting there going, we don't know, I don't know. I have no idea whether the market's going to fall apart or not, or if it's gonna go, like, we're all, we're all making our best projections, but we haven't been in a global pandemic before. So you can't rely on, on price rise and gain to continue to hold you up. You've really got to change the value proposition when you're renovating and make sure that you're holding kind of the land value in the increase there. Because as soon as you go to buy something else, it's already at that upper level again. So you don't take that money out and bank it, especially if you want to do it continually, you take that money out and you've got to buy something else.

Rebeka Morgan: And if you can't buy something for, for less than that original value, that's why it's important for that difference and to change the value proposition. So if you're spending half a million dollars on a renovation, you want to be making, you know, at least 200, 300, 500, more than that depends on what you're doing and what kind of market you're in, because that's a profit.

Veronica Morgan: That's been harder and harder to achieve though. And certainly what I see in a rising market, and I've always seen, this is two things around this topic. One is that the difference between the unrenovated property and the renovated property gets smaller because people go for the rent of the unrenovated thinking that's the only way into a heated market. And then they underestimate the cost to actually do the renovation. And secondly, the difference between a really good renovation and an average renovation, that difference shrinks as well.

Veronica Morgan: And you know, and one of the things that I really focus on with our clients is you gotta, you gotta get an a grade property. So it's actually one of our, one of our reviews recently said that we're biased towards a great property. I thought that was funny, but you know, you've really got a buy, like you said, the land value is, is a real part of it. And that's obviously where it's located and how valuable land is in that place, but there's, whatever's on it, you know? So I noticed with your developments, for instance, it seems to be that you buy period homes, you know, more than the don't and then do a renovation to add to those because there's a scarcity in that, right?

Rebeka Morgan: Yeah. Yeah. So you guys love talking about scarcity and we do too. It's it's it's can you replace this? And so if I do this renovation, do I think given what I'm doing, that they can go out and replace this by something else that's going to be like, no. Okay. So now I've got scarcity. People are going to fight for it and they'll pay a fair value. Let people that don't pay over, but you're creating the value out of that as well. Right? If it's a brand new house, people are going to go, okay, well, I could build that in some ways, unless you're doing something that they don't think they could achieve, or unless it, the build is clever or speaking to them in a way that they don't think they can make that happen. If you just give them what they think they can do. Oh yeah, I could do that. Then they really don't want to pay you for that.

Chris Bates: A certain price point where you think, you know, trying to flip and make money and renovations is extremely hard. And the risk versus the reward is very little, you know, because it's so easy to either capitalize on a $200,000 property, right? Because the materials and, you know, there's a certain price point where people are willing to pay in that suburb. And it's very hard to like make money. I imagine. Where do you sort of think that the sweet spot is to start to play in sort of renovations to make a decent profit?

Rebeka Morgan: I, I really struggle with one size fits all and kind of blanket advice, because there are people that can do a whole heap of things and they're really good at, and they will buck it, you know? And so I'll say in my market, a kitchen would normally cost somewhere between 40 and 60 grand, and then I'll get a whole heap of people go. I did my kitchen for five grand. I know that. And Noah buy a house with that kitchen in this suburb there's times. So basically what are we looking at? We're looking at labor or the hours that it takes. And the labor market changes across Australia. People will pay more or less for labor. And then we're looking at materials, what materials you're using suburbs sometimes dictate what materials should be used for those suburbs. So in one suburb, it might be fine to have laminate benchtops and in another suburb, you really will need a marble or natural stone to kind of hit that wow factor.

Speaker 1: So you kind of need to be an expert in your area and you guys are amazing because you guys look across Australia and you you're experts in many, many different areas. I can't do that. I'm like, I know my market because it takes such a long time to get to know a market, these straight versus set straight. And I hear you talking about it, that beachfront and here, and you know, that one's got maybe something untoward at the end of it, that people who are in that area won't want to go near, but if you're looking at our on paper, it looks okay. So yeah, I kind of think you need to be an expert in the area or become an expert in the area. You want to do this. Because if you just kind of look at it on paper and you go, okay, well that one sold for 2 million, that one, four streets away, you know, is at 1 million and I could do a renovation and hit that it may or may not be right.

Chris Bates: Cereal. Things are really interesting when like, layby right. Like you can sort of negotiate that, especially if you, you know, you don't want to always go for the cheapest, you want someone who's going to give a quality product, but at a fair sort of market. Right. Right. And then they've also got a few off ciders that are at a cheaper rate to help do the legwork on the material side. Do you sort of like try to do that yourself in terms of the margin that builders or tradies that are allowed on do like try to,

Rebeka Morgan: This is a bit different. So I am a registered builder, so that's one thing, but we, we buy a lot. So it depends what we're doing. So we've got it. We teach a few different models. One model is kind of engaging a builder and other is a blended build her model, which has kind of working alongside a builder to create the outcome and kind of helping source because builders are really busy. So they, they're not going to ring around 15 different suppliers and find the cheapest of that. Or they just, they don't have time for that. There's no value in that. But if this is your hard-earned money and you know, that that five grand that you saved by doing that is, you know, takes you three months to save, then it's worth it for you to make those phone calls. So blended build her can be a good way to work, but you've got to kind of negotiate that contract upfront. And another way would be owner, building, owner, building doesn't always save money because you don't always do what you doing. Exactly. That's funny. It's it's like, yeah. I mean, I've done three renovations and I say that, but I've never actually had hidden that hammer on a nail. You know,

Chris Bates: I've worked, I've engaged three builders to renovate, but I mean, you've got the two options when you engage in those builders, the fixed price contract, or sort of the cost plus, I mean, you're a builder, Rebecca, what's your sort of thoughts on that discussion.

Rebeka Morgan: I'm at cost plus because there's really no motivation to bring that cost down. So you really want to be working alongside that builder. So cost plus means that it's whatever the mayor materials cost plus the labor of, of the people who are working on it. And then the builder gets a margin on top that's cost plus contract. So there's a few things you're not allowed to do a cost plus contract in, in Victoria, on a bill that's under a million dollars. That's new. So it doesn't need to be a renovation, but sometimes it's really hard to factor in what it's going to cost to renovate the front of a house. Actually let's touch on that for a second. One of the things that we say, people come up with all the time, it's all going to our house. And then they struggle to estimate how much it's going to cost to renovate that house. Do you guys have that problem with your clients? Yeah, totally.

Chris Bates: I was like, oh, the garden's going to cost X. And then when we got started, I'm like, oh, that's That. Oh no, it's 2.5 times that, and yeah, you just don't know the time and the, you know, when you're fiddling and then when you set a certain standard, you've sort of got to keep it going. Like if you renovate the first room, your house really beautiful, you're like, oh God, now I'm going to do the next room. And money can just very quickly run out. Cause you just yeah, you just completely underestimate the standard you set. I guess

Veronica Morgan: I remember that ad where the guy sort of pulls a little, sort of caught a little bit of frayed in the plaster, the whole wall falls off, you know? And so I think that there's all the unknowns that people have no idea. It's like people, you know, giving an idea about what it costs to render a house and they don't realize you got to take off everything and then, and then scaffolding and then re fix everything. You know what I mean? Like they just got no idea about what leads up to whatever job they want to do and then what comes off. But they also want to be able to tell them, so they want to be able to ring someone and say, oh, how much is it going to cost to renovate your house without working out what they actually want to do? You know?

Rebeka Morgan: This conversation, I'm sure you've had this one before. I just want to put a room on the back of the house. How much will that cost? Okay, well cool. So does it have a kitchen? Does it have a bathroom? It's a lounge room. Is it just a room? The room is, is it like here? We, and so all these little factors kind of give information about what you should be allowing, and you've kind of got to have your end game in mind, but the point is he can actually start to make reasonable assumptions by just creating a least of what you want to do and allocating some costs. So a lot of people don't want to put any effort in that. They want the answer. So if you're going into a house and let's say, we're going to take a simple one here, we're just going to do an internal renovation, right?

Rebeka Morgan: We're not going to take any external walls. When we go into that house, we might go into the first room. We go, okay. So I need to replace the blinds. I'm going to need to patch the plaster. I'm going to need to replace maybe rewire or replace the light fittings the carpet needs doing. I'm going to need to paint it. What else do I want to do? You might want to put some joinery, right? Wardrobes. Right? So if you actually just make a leased and start putting some costs against them, you will see that those costs add up really quickly. But you know, when you go, oh, it'll cost 200 grand to do that. It feels like that's a really big lump of money and it may be, it depends what you want to do with it. And what you're hoping to achieve about the dollar per square meter rule square meter.

Rebeka Morgan: So people say, oh, it's $3,000 a square meter to build, or it's going to upstairs is going to be 5,000 a square meter for argument's sake. Well, I mean, that's a really good place to start for sure, because you've got to use something. What it won't help you with is renovations internally and you need really volume or scale to actually use those rates. So if you're putting on a hundred meters renovation and it's in a given area and you've, you've checked this price with a few builders, or if you're building new, you could probably use some of these rates and it'll give you a bit of a qui, right? So you'll be within a distance plus or minus distance. But if you haven't designed it, that can't be knowing you could probably, this is the other thing. Most people can probably achieve that sort of budget it's whether they want to, or whether they'll make those changes in the finishes to achieve it.

Rebeka Morgan: So at that may be going okay, well, instead of that, $150, a square meter flooring, I'm happy to shop around and get a second and, and use a $50. That's not quite the color I wanted, but it's perfectly good carpet. And we'll use that. But most people will go, oh no, but, but I really need that more expensive one. And then they go, I don't understand why it's over budget builders. You know, they're so expensive these days. It's, it's kind of a bit of both, right? It's like, we want more, but with a fixed price contract, that shouldn't happen right. When the blow outs happen there. Okay. So that the, the fixed price contract, the blowouts happen in the beginning. So what you, what you get with the fixed price contract is you do all your design work upfront. I hope I'm not going too fast for people, but you're going to engage your design teams.

Rebeka Morgan: And that might be a designer or an architect or a interior designer, whatever that is. And you'll specify all the materials, fixtures and finishes up front, and then you go to market. So that's your area of risk because it's all well and good when you're designing and you think you've got it under control, but your designer is not an expert in the bill cost. And just not because, you know, they're taking things to builders, but it's not their job to cost project. So sometimes they're not aware, you know, some are really good at this and others aren't, but some of them are aware of the, what the structural change will do, or the difference between the cost of a slab or a, a timber frame, you know, like it's chicken and egg though, isn't it? It is. So anyway, you'll get a really good price, but it might've blown out 200 before you begin, but hopefully you'll stay in budget at the end.

Chris Bates: Well, I guess it's also true that build, I mean, you've got to have a pretty imaginative sort of design mind thinking to know what you really want to do to add the most value and to live a certain way in that property, upfront on a property is unrenovated right. Like you, it's not easy to sort of really think through that when you've just got this box of a house. So, I mean, a lot of the things I've seen with fixed price contract, we've done a few recently where, you know, four stages into the rhino. They're like we've had a bit of a blowout. We changed this, this and this and our last payment needs to increase a lot because it just something's happened. Right? And they're like, wouldn't it be nicer if we put the wool over here and not there, and that would give us all this extra room. And so that, that definitely happens along the way. And it's interesting. I would definitely speak to your broker before you make those big changes, because you can very easily get yourself in a mess if you do those changes and then you can't get the finance for it, which has been tied a couple of times to clients

Rebeka Morgan: Finances. One of the things that you really do need to consider at the front, sometimes people think that they can borrow to own a build. That's really tricky, like really tricky, way more expensive. So I'm not giving you financial advice obviously, but I'm kind of leveraging the full capacity. So if you're, you know, if you're borrowing against a house that's a million and you put your 20% down, or you'd probably try and take the loan for as much as possible and use an offset account, which gives you cash free to renovate. If you can think within your circumstance, rather than get the loin, you think you can afford, because it may be you, you had that money phrase. So you only needed like a 400 grand loan or a smaller loan, and then try. And reborrow, that's a lot harder. So understanding cash flow and the way banks look at things, and the payments that they like to make is also really important. They're going to prepare a builder and a fixed price contract over kind of any variations along the way. And then you're right. You can get stuck and, and you're going to need to tip all your money in before they'll pay, which means that you can get really stuck if you make variations. Yeah. So you

Chris Bates: Can gauge by property. And you're like, okay, now I want to run our it, but it's not a full construction Reno through a builder. It's just a lot of cosmetic things. And the bank will say, well, we can't do a construction contract because no construction company wants to do it. It's not big enough, but I've got enough in the bank. And I can't, reborrow on the property and I can't get a personal loan. And so literally you can easily get stuck where you've got a property that needs Reno, but you just can't get the funds for it till the property value goes up in value, which is always, you know, hard to know when or if it's going to happen. But even if it does happen, a frustrating thing is we'll order evaluation for them and say, I bought it a million and now they think it's worth 1.4 because there's a recent sale. And then the VAT will come back at 1.25. And we're like, oh, you still can't do the Reno because the vowels have come in low, which is inherently a problem. So it's, you really got to think that rhino through first, because a lot of clients I've seen just bought thinking, oh yeah, I'll just, just do a rhino and then they can't get the money because there's no way to do it. So they have to live in this house that is desperate for a rhino. If you

Veronica Morgan: Had that happen a lot, Chris. Cause I mean, you know, over the years I've met so many people who might say, yes, I've got a budget of $2 million. For instance, if it's somewhere intubated, you know, you're like, oh, you know, I'll pay one five, and then I'll use the rest to Reno. And I'm like, hang on a minute. Have you checked that, that extra $500,000 in your purchasing budget would actually be available as cash to renovate? If you don't spend that much money, you know? And quite often they have no idea that they don't actually have that pool of money, that bucket to draw on. And it's like, yeah, fancy getting stuck in something that you always intended to renovate and then can't go home.

Rebeka Morgan: Well, that's where the, it never ending renovation comes from. Isn't it like the five-year Reneau where you've got to do this bit. And actually there's nothing wrong with that when you're starting out. But I guess we get really impatient over time. So, you know, there's a few things here. If you, you know, I see a lot of people who want to jump to the very end point without kind of doing those, those stepping stones. And I know Veronica, you run a course, which helps people understand how to step through that process. Yes. Get it in the right order. I'm sure yours is exactly the same day. You got all these things you have to do and he'd get them out of order. You're gonna shoot yourself in the foot. It's all about

Chris Bates: The order. Isn't it like the order renovating my ex would be different that person doing the seven year out one, that's a, that's a painful thing. Cause you always got to say, well, we're going to do next, but there's probably a lot of wasted cash in there because they've done the floors first and maybe they should have waited to the end to do the floors or maybe they didn't do the, the, the painting before the done the electrics or something. So is there a certain process that you like to think if you're going to attack a Reno, you first sought out the electrics, let's say, and then you do the kitchen. What do you sort of, is there a process you'd like to sort of, yeah,

Rebeka Morgan: So we teach people to master plan and kind of understand what the priorities are, but the priorities will, we both in terms of building and having to do things twice, but they'll also be in terms of livability, you know, sometimes you just need to get to a certain stage to, to move further. I mean, I live one of those properties that you looked at Veronica. I had I moved in with my family and we were going through the planning process because we were divided subdividing the block, but I didn't want to spend a lot on the house, but I needed to live in it for a couple of years as well. So for me, I ripped out the carpets and I planned it, painted the floors beautiful Navy color, which won't appeal to a lot of people, but I didn't have to sell it like that. But I, it was just a little bit of a paint to get me through in some rugs. And I did an update date, you know, so I was making a home in the interim. So you're always going to need to kind of balance how you can get by living or how you can kind of create that home environment for you and your family versus what the most efficient use of your cashiers. Yeah.

Veronica Morgan: If you like what you're hearing here, please share this episode with others, you feel would benefit. And while you're at it, why not leave us an iTunes review five stars, please. Every review helps make it easier for other people to find us and hear what our amazing guests have to say. We love hearing your questions and we're planning more listener Q and a episodes. Please send your questions in. You can send them via the website, which is the elephant in the room.com today. You or directly email two questions@theelephantintheroom.com.

Veronica Morgan: Somewhat similar. I mean, the house I'm in now, I did a complete rebuild on it over a year ago. And, but I had it rented out first and there were students living in it when I bought it. And that was fine until the students even started complaining about various things. And I was forced to spend some money before I was ready to do the full renovation. You know? So some of that was where were things that needed to be done. And, you know, we're part of the renovation and some were then subsequently ripped out and thrown away. So which I was always uncomfortable with, but it was necessary. And I just wasn't in control of that timeframe. So some, you know, that's unavoidable costs at times. What do you think though? You know, you talk about, I mean, it's obviously important not to overcapitalize and that's a big fear. I mean, Chris, you know, I mentioned it, you've mentioned it, Chris, how do you help people work out how to calculate whether they have or haven't and, and how to avoid it? Yeah.

Rebeka Morgan: So sometimes people were going and they go, oh, I don't really care cause I'm going to live in it. But I don't subscribe to that because I don't know about you. I don't have a crystal ball. Like things can happen, you know unexpected. And unfortunately, you know, we're getting to that age where sometimes things crop up and you didn't see that turn and, and you might need to sell a house or something might need to happen. Now you don't want to have lost money in that process. So what, we've got a free guide, actually, we've got a whole heap of resources. So if you are interested in kind of finding out more about some stuff like this, and I'll do send you to some downloadables, if you want to pop the link in the sh in the show notes, thanks, Ronica.

Rebeka Morgan: There's a love it or leave it calculator. Cause sometimes you're better off renovating your house. And other times you're better off selling that house and moving into a new one. And there are personal things that factor into this. But if you can get the numbers out of your head and nodding guesstimates, and kind of, we, we just give you basically some ideas of things to put down, right? So, and this will go through things like, okay, we've got stamp duties, we've got selling costs, we've got moving costs. We've got some way to leave. We've got a marketing value. Like we've got to put all these things in. Often we don't think about that. We might think about stamp duty, you're rolling over loans and then work out what you're hoping to achieve or how much money you would have to renovate there or to sell a house and try and change.

Rebeka Morgan: Because really it's about what you're trying to achieve. If you're trying to achieve a bigger backyard, you can't achieve that in your current location. So you probably have to move, right. But if you're trying to achieve more living space or a second floor, maybe that is achievable. So we kind of go through this, but what it'll force you to do is look at the market value of houses around you that are selling and what you can actually buy versus what you can turn your house and what it would sell for. And obviously there's a lot of nuance in this and you guys are helping people through that and kind of understand the property market, but you can kind of reach out to people around you. You can talk to real estate agents and, and you can kind of map out what you want to do and see what it would be worth at the end.

Rebeka Morgan: Again, all of this stuff takes time and effort, but it is definitely worth doing. And you're going to have to put some guesstimates in. Obviously people are in like a course, like hours or have access to you guys, you know, they can speak to them and say, okay, well what can I get? Or how much has this renovation going to cost? And we'll, we'll map them through it, but you do have to start somewhere and, you know, ringing a few people or understanding what people have done and how much that costs like this has important information. But what it costs for me to build around here is not going to be the same as water costs. Veronica revealed around her area or Chris to build around his areas. So it's all market driven and all localized, which is why you really have to learn how to do it yourself.

Veronica Morgan: You know, you talk about working out what it's worth now, what potentially it could be worth. And she renovated and we talk about overcapitalizing and understanding what your property is worth now and what it potentially would be worth after you renovate. But one of the things I see a lot in, particularly in inner city areas is that people overcapitalized by basically trying to turn a house into too much, trying to make it do too much. So I recently just a couple of weeks ago, looked at a property in Camperdown. For instance, it's a four bedroom, two bathroom house in a really good street, but the problem is the living space is minuscule. One of the bedrooms has only like a skylight in sort of this weed roof. Basically it doesn't sound a real bedroom. The gardens, the handkerchief that does have real lane and they could have had parking and a garden if they didn't extend the house out so far.

Veronica Morgan: So they've made all these compromises just so they can say, I've got four bedrooms and fundamentally they've got a four-bedroom house that people who want a four-bedroom house won't want because the living space isn't big enough, the garden isn't big enough and there's no parking. And you think, well, they could have had a fabulous three-bedroom home really well balanced that would have been worth more and, you know, and had more people interested in it. Then this massively unbalanced compromise four four-bedroom house. And I think that's one of the things that people do. Unwittingly. They think that bedrooms add value and they also will put two bigger house on two smaller block of land, if they're allowed to in certain areas. I agree, but what are the, like, they were a number of points along that way that they could have checked themselves and could have understood that, that wasn't going to be the right outcome for that suburb. A they could have done their own research. What's selling like that. There are times that you should back yourself, but if you're not an expert in, then really try and seek some advice and people don't know what they don't know though. You know what I mean?

Rebeka Morgan: Yeah. Everyone does. You can always reach out to real estate agents and say, okay, well, here's my plan. What, what do you see as issues here in a good state agent? We will give you some feedback. I mean, I do this, any plan that I put together, I work alongside my team. Now my team looks like a real estate agent because he's going to have to sell it. And he will give me critical feedback and that feedback I might agree or disagree with or argue with. But, you know, I, at least the feedback's being sought. You know, there was one that I took to him, you know, a month or two ago. And I had seen that the laundry was too small or it was a one-sided laundry for a four bedroom family house. There's like laundry is too small people don't like that, you know?

Rebeka Morgan: And so you're looking for them to give you that. And I'm like, okay, well, which one do you like, do you like this one or this one you're looking for their expert opinion. And you can take that to a number. Or if you got one that you trust, you should always check that beforehand because a small two small bedroom or a two small lounge room, they know they know that that's going to be a difficult sell. And for them, especially if they're going to be selling this house, I really it's in their best interest to really help you drive that up. Some of the conversations we can have is, do I need to put, you know, am I going to need to do an outdoor area here? Is that okay, Paul or not to Paul? The ultimate question. And so we've, we've got these all single car garage or one and a half garage versus double car garage, you know, in my area, it's fine to do a single car garage, but that would be a definite no-no in other people's.

Veronica Morgan: It's very true. The thing is though that I think what happens is that whole sunk cost thing, that if you get that advice too late into the planning process, you're, you're too wedded to what you've already, you know, either got approved or, or literally got all drawn up and ready to submit to council. And so getting changes is like it's too late. So I think it's at concept stage. People need to go and get that advice. And 100% agree, find a really good local agent that sells a lot that that will work with you. I used to do that when I was a sales agent, I had, you know, that my sort of renovated clients and, and I know my ability to hear he does. They do a lot of development as well. I know their agent and they worked very closely together. It's it's, you can see the difference, you know, cause I can see properties that had been well renovated and brought to market with that, that cooperation versus those that have not sought any advice. And it's fundamentally got a sticking point. That means that the might only have a couple of buyers, maybe one versus another one. That's got 5, 6, 7 buyers on it.

Rebeka Morgan: Yeah. So even different suburbs it's like, do you use an architect or do you use an interior designer? Some people don't want to spend the money on paint. Experts will help you achieve the right price if you don't engage them. And it's not your skill set. I mean, how many townhouse developments have way, same with the same black and gray color scheme that speaks to no one,

Chris Bates: Can I ask you about that actually? I mean this, how do you think like the dangers in, in going too deep down in your personal preferences of style can cause end of the day, don't sell it with the furniture, but you do put fixtures and fittings in and the kitchen is a certain way and the bathroom and even the color you paint the house, how do you sort of temper your own personal preferences? When, how are you going to live in it? But also potentially when you're going to sell it one day, it's got to sort of appeal to the market. Like how do you think the problems of styling or following your personal taste?

Rebeka Morgan: Yeah. it depends whether you've got good taste or not, everyone thinks they're a better than average driver. Right. And everyone

Chris Bates: Thinks they've got great taste and money. Unfortunately I think the more money someone has got the less taste I've got in my mind. But 

Rebeka Morgan: Yeah, sometimes it's just one of those things. It's I have a look and all of these can be done with research. So I have a look and we don't, you know, people won't always get it a hundred percent, right. But have a look at the standout properties in your area. So you can actually see what people are drawn to. And again, it's area specific, which houses have 50 people at every or 50 groups through every inspection. Now each ones have, you know, a handful, anyone that hits high. And even if you go back in time with you real estate agents work with them now, okay. It could be location. It could be a number of factors that sometimes the style or the style of that home is really hitting resonating with people. And so the ones that stand out, I pay particular attention to the standout values.

Rebeka Morgan: I'm like, why, why are these home from my area? Now, Veronica, you picked up on this, you know, it's heritage for some people grew up with the idea that they wanted to live in a cute little cottage with a great renovated, you know, modern extension. That's going to sell really well in my market, not in everyone's market. And then some color schemes. In some ways people put the floor plan together, work really well and people are really drawn to it. So keep a mental note. People have done this before, what they've put together as a starting place for you. And if you are completely different to everyone else, ask yourself whether that's a good thing or not, whether this is an area where you're truly an expert or perhaps you know, you're guessing, are you using black taps in your renovations at the moment?

Veronica Morgan: New they're everywhere here. Like black taps will be out of fashion very soon, mark my words five years ago. So the thing is you're trying to get some market. So for me it pays to be really on top of what's coming out. So I'm looking at, I'm always looking at the top designers, what's coming out, what the awards win. And unfortunately that means that I always feel substandard. Cause I'm looking at all these amazing projects and I'm like, oh, but we're also kind of picking those trends, but this is our full-time game. If this isn't your full-time game, you don't have that luxury of time, but you can get someone involved to help you. Or you can do, you know, an hour and a half of a style consult or a concert. You know, we do this with people as well, like a consult for an hour and a half.

Rebeka Morgan: We're not picking the finishes for you, but we review what you're doing. We'll review the floor plan and say, this is wrong. This is wrong. You know, like have you thought about that? You know, there's an opportunity. Lots of people design without consideration for light, which is a big no-no in our minds. It's like the floor plan works. That's really great, but there's no Northern light. That's going to feel really dark. This area doesn't feel good. And then understanding how a house is going to feel is what an architect has spent, you know, six, seven years training for, but also, you know, the difference between being able to sell that house because people buy a house of feels good to them and the ones that they don't get a great feeling of it can have everything on paper, but it's just not going to, it's not going to get across the line

Chris Bates: The day you do your open home and you only got three of them, potentially two of them, or, and those days may be not the weather you're hoping to sell your home in. Right. You know, as an overcast rainy and your place is not that sunny day, that's going to potentially get that time. That perfect little bit of lighter Lim 15 when the open home is, you know what I mean? And so you've got to be super careful that, you know, that's out of your control, right? And then you've got to be like almost the home's great in that weather. So imagine what it would be like on a sunny day, you know? And and maybe the next open home, it's still the same way, which is quite common in your market. When you say that, are you saying Melbourne generally or do you cut it down to a certain pocket?

Rebeka Morgan: No. So when I'm talking my market, I'm in the inner north in Melbourne, so we've got a different set of conditions to say the Southeast and all the Eastern suburbs. Like they're looking for different things, you know, but the size of houses that I build here would not cut it in one of those suburbs because they're much bigger blocks and they go, these are tiny. Whereas here they go, oh, these are quite spacious. And so, yeah, but I agree with you. It's kind of understanding the feeling and, and a lot of that stuff. You're spending a lot of money on climate control and hydronic heating or, you know, inbuilt, like we're putting to add to projects we're running at the moment, a seven star energy rated home. So they don't have gas on them. They using top kind of fixtures and finishings. The heating units are kind of these brand new kind of Samsung technology that's come out.

Rebeka Morgan: We've got all this stuff in it that you like, or is the purchaser going to know or notice I'm like, yeah, they're going to feel it. Yeah. So anytime they walk into these homes, they're going to be the right temperature. But also they'll go back through and they will check these things because people want to know now the scarcity will drive a point in this. And I don't know if I'm selling in a top market or a, you know, if the market is going to be flooded with stock and there'll be a lot of competition and I've got to stand out amongst that. But I know that how people feel and the energy that they, that home brings back to them, which is light. And it's all those different factors, how it feels is important to getting them across the line. We kind of say, by the time they've hit the kitchen there, they're working out where their cutlery is going, then you're in a good spot. But if they don't care, then you know, you really haven't hit the mark with them.

Chris Bates: Yeah. The planners, have you got a property Dumbo for us? I'm sure you've got thousands in the renovating game. It's pretty easy pickings.

Rebeka Morgan: Do you know what? The biggest thing that we say come across our desk is people that want to do a subdivision or have kind of gone through the process to do a subdivision. And the subdivision costs don't stack up. You cannot subdivide every, even if the council will let you subdivide a house, they don't always stack up sometimes the cost to build both of them. And actually we had one that we were helping someone run through and she would have done all this effort and all this work to lose 300 grand. That would have been the ultimate value.

Veronica Morgan: There's a lot of false hope pinned on subdivisions and, and building duplexes. And, and I do to talk to a lot of people who sort of decided it's the next level in terms of active property investing. And I'm like, oh boy, if you don't know what you're doing, we'll point them in your direction.

Rebeka Morgan: Okay. So it's about really getting those feasibilities right. And checking them off. You know, in that resources page, we talked about, there's a $7 feasibility template. You can download that, just run your numbers and understand what your numbers are. That's not really going to help you work out what they are. You have to do some work. But the biggest mistake we see people taking is, you know, not doing their research and I got, you guys had have the same. It's like they go into this and they kind of either get frustrated and they just buy something in the end, or they're not running the numbers, or they're not, open-minded enough to look at different scenarios. So they want the best house on the best street, but looks like it's really easy to renovate, but so does everyone else that's in that house is rarely going to be your best option.

Veronica Morgan: Very true. The problem is that there's overwhelm, you know, and when we have decision overwhelm, often we get decision fatigue. And then also I should say information overwhelm leads to decision fatigue. And that just leads to sometimes just checking out and not really making properly thought out through decisions and just knee jerking, you know, see it time and time again. And I'm, and I'm sure it's the same on the renovation side or the develop the small-time development side. But I think a lot of mum or dad sort of property developers think that, you know, how hard can it be? It's just, I know I've known people that got caught out by the, you know, the problems and the trickiness with subdividing and services and all sorts of ways that they get stuck. And then they thought they were going to do a torn sort subdivision. All of a sudden says, strata, title subdivision. What does that mean? And all the unknowns, oh, I had no idea. Or it happens. You spend that's 30 grand.

Rebeka Morgan: No, I didn't put that in my budget. Oh, the bill cost has gone up or I can't get it built for a thousand dollars a square meter, but someone said I could, you know, my neighbor's best friend's boyfriend did it.

Rebeka Morgan: He's probably not reliable. That's where Dan is greatest.

Chris Bates: I mean, it was a friend slash client is, you know, grown up in development and done massive apartment blocks, done all sorts of stuff. And he sort of runs the company now and he was doing, you know, the building game sort of gone quiet right in that sort of a couple of years ago, especially in the apartment space. So I was just going to do a few duplexes and the middle ring sort of rhinos, and one was doing in your pocket, Veronica. And he just didn't realize that electricity sort of needs and what it needs to upgrade the electricity and the cost. And that completely blew out his profit and his, and this is a guy that does it all day, every day, some feasibility Saudis on 30, $40 million projects and just missed one thing that he just, and he's just like, you know, just last set himself really.

Chris Bates: Cause he's just like I do this, but then that cost plus a couple of other things that didn't go to plan have basically killed his profit. And he's basically just can't get, wait to get rid of these things because that whole process is kind of not really been all the effort. And I think that's something that can easily pop up. Just one thing that you hadn't thought through that completely blows that whole energy and effort and stress over a few years. So I want a final thing. I was just going to ask you in terms of materials, you know, what are you sort of saying there? Cause I think something I'm noticing you know, you can factor in your field and someone can factor in the cost of labor, but the cost of materials also changes, right? Like in terms of timber costs or cement or et cetera, do you find over time these have shifted a lot or do think it's just sort of a recent phenomenon?

Rebeka Morgan: I think they've been, they've always been, you know, for the last 20 years have been going up. And I guess what's important to understand is that Australia is a really great place to be a trade, you know, as opposed to different different areas of the world. Trades and materials are quite good. Trades are great in terms of what they're pay, but materials often need to come from overseas. So some of the issues we're having at the moment as the timber mills kind of keep up locally with the supply and then you've got, you know, a boom in construction or renovation in America, which is paying more for the timber that we'd normally import from places like New Zealand. And so that's getting shipped out to the U S so we can't get timber. And I have never seen a timber shortage like this in the construction industry, but it means we've all got to think about it.

Rebeka Morgan: And maybe the question that people are going to be asking is, do I need to start my renovation right now when I've got a timber or do I put it on hold and start next year? Or is it going to balance now? There's no given answers to these because we, we haven't run out of timber before, like actually run out. You can't get any at the moment, which is all right. If you've got a couple of hacks on timber, but if you stay, you know, on a job or if you're towards the end phases of a job, but if you're at the beginning, you, we can't do that or you're going to need to make some compromises. Do you change to steel studs? You know, so flexibility is required. You couldn't predict that. And I guess that's the thing about developing for profit or developing in general?

Rebeka Morgan: Is it these things you can't predict and you need to have enough, I guess, enough profit in your projects to be able to ride that out. Now, lucky for us, if you bought something at the beginning of last year, the, the, you know, in the right suburbs that, that you need done your value and it was sought after you generally speaking, we might be looking at a bit of a gain right now. Sorry, I know you don't like generals, but that's kind of, you know, so that could potentially out rise your construction cost, but then you'll have to buy again at the end of that. So you're going to have to lose that, that bit's going to be out of that anyway. It's a tricky time to be building, I guess it was the answer, Chris, I don't know when you

Chris Bates: Say your profit margin, what are you sort of thing like clients, or sort of say, oh, we're going to spend 300 and we think it's going to potentially add three 50 and I'm like, oh, that's bloody tight. What are you sort of three

Rebeka Morgan: 50 in total that would spend 300 to

Chris Bates: Get three 50. I

Rebeka Morgan: Probably wouldn't play that game. You know, if you're spending 300 on the house in total and you do, you know what? Sometimes people need to get in and learn. And the first projects it's okay to really make not a lot. But as you start to scale up again, it's about the value proposition. It's about how you change things and working in a market where there's not a lot of competition, you know, like, do you join together with someone do a JV at this price point where I've got kind of maybe five people working in that market? Or am I kind of sitting amongst everyone else? Who's kind of overpaying for the ideal renovators delight in this current area. You really have to be looking off market. Cause renovators delights at auction are going to be really tricky to acquire. If you're getting them right now, you're paying a lot and I can't make those numbers work and I'm a builder. So I don't know how other people are making the work either. Maybe they're just relying on market, keeping them on going up. Well,

Chris Bates: That's it. Sometimes you are competing it's to build a right, a guy, you know, or go Brito, basically, you know, buying a job. We're buying work for the building company. And you know, they willing to pay 2.2, but you know, the rent is only going to cost them 400, but we know every man and his dog, you're going to have to pay 700 for that. So, you know what I mean? Like it's it's

Rebeka Morgan: But I don't think, you know, one of the things that I think is that, that people think builders, margins are a lot higher than what they ended up being. You're tied to that project for 10 years. You need to go back and fix stuff. Yeah. You know, you're paying your wages, you're paying all that. Like the margins just aren't that, that good and buildings at the moment, if you're buying, you know, work, there's an underlying issue with your restaurant it's truck shop because it's a builder's market. It's really hard to get a builder at the moment. It is hard to get materials, hard, to get a builder, hard to buy a property. It is, I think the decision making around this is different if you're buying, because this is what you want your business to be effectively, which is to renovate, to sell. That's very different.

Veronica Morgan: You're a developer versus if you're buying to renovate and live in. And so the, yes, you don't want to overcapitalize you do want to work out what, you know, what you paid for, what the cost of building is going to be, what does ultimately worse? So you want to make sure that it makes sensible decisions, but at the same time, the risk there is not so great because you don't have to sell it within a certain period of time in order to realize that, and then to go onto your next project. So you know that it's, won't apply either, right? Sales, you know, like all these kind of add in numbers, you don't actually have to apply until you sell true. It's not an excuse, not to pay attention to that though, because like you said, earlier, things change and you might find yourself in a situation where you do need to sell.

Veronica Morgan: So obviously it's a bit like, you know, people come to me to say, I want to buy a family home and talk about capital growth or it doesn't matter because I'm going to live in it. But the same as you know, it doesn't really matter if I ever capitalize it was all. Yeah, it does. Because even if circumstances don't change for you to put you in a situation where you have to sell and you don't want to, you know, in 10, 15, 20 years time, when you are in a situation where you want to downsize your choices, your options then are going to be vastly better. If you make good decisions now as well. And I think the same thing does apply to you renovation decisions. So you might not know you overcapitalized, but at some point it will buy it.

Chris Bates: Rebecca. He's saying clients where they potentially have overcapitalized right. They bought a nice frontage in north get right. And they went and did, you know, really top end rhino on it. But at that stage when they purchased, Northcott, wasn't really attracting that type of buyer. And so if they sold in, I don't know, 2015, let's call it those buyers weren't buying in North Korea, but in 2020 or 2018 north, that was the hot suburban. So someone's, overcapitalized in the short term, but then the market sort of in the demographic, the price rises is really shifted. And now they've all, all of a sudden haven't overcapitalized would be sort of seeing the market demographic shift where it saves people.

Rebeka Morgan: It's it's luck. I mean that in a ring, I guess if you kind of you, right? Like no one wanted to live in North Korea in 2000 now it's like a place to be. Yeah. But you don't, I guess I've seen a lot of people get burned and I've seen a lot of people think that they're doing the right thing. And then they've kind of developed a property and they've had to sell for whatever reason and they've lost money. It doesn't always work for people. And I know you talk to people about, you know, you've seen people buy something and it not rise at all in 10 years. And people think that property is this magic bullet and it can be if you do it right. But it's like anything you have to invest some time. I wouldn't go to the share market and throw a whole heap of money at it and expect that to go up. Right. I need to do that.

Rebeka Morgan: What I'm like, what I'm doing with it. And you know, people invest all these time and energy in getting their job right. And yet with their personal wealth and their personal savings and getting their family ahead, they're so haphazard. And I think that needs to change. We need to put more effort into value that we can create personally than what we're doing for other people, in my opinion.

Veronica Morgan: Well, on that note very much, it's a good note to end on, like with everything to do with property, you do it well, like you say, you can, you can do very well when you don't do it well, and you can actually cost yourself a lot and really set yourself back financially. Now we really appreciate your time and we will put the link to your resources in the show notes. And obviously anybody is interested in, in renovating. I think that it's a fantastic idea to go and learn, go and understand what you're in for and, and minimize those risks and, and understand the costs, et cetera, et cetera, et cetera. So thank you so much for joining us today, Rebecca, thank you so much for having us.

Chris Bates: We want to make you a better elephant rider and this week's elephant rider training is I'll just give you a

Veronica Morgan: Quick hint as what I think made a very successful renovation for me personally, and I've done three and three very different types of renovations too, with my own home. One was for an investment property and the most recent one, I had a great relationship with the builder and I am proud to say the builder says that I'm their best client. And the reason I'm their best client is not because I was nicest because that's certainly not my personality. I don't think straight, but I'm not sweet and Cod, I didn't come and bring them T and B. But what it was is that I really made my decisions upfront. And, and the thing that Rebecca said is where money is lost on a fixed price contract is at the beginning. And I had an architect and I had an interior designer. Okay. But, and I did make that commitment that I wasn't going to make changes.

Veronica Morgan: Once I decided on the, you know, all the finishes and all the rest of it, all the, all the decisions that I made in the lead up to actually putting out tender to builders. I made that absolute commitment to myself that I wasn't going to change because that is true. That where I see a lot of cost blowouts is in people chopping and changing their mind mid built. Not only did it keep things within budget, there were a couple of little blowouts who I'm foreseeing. One was basically when they were digging and looking for rock, there wasn't any. So we had to get peas put in that we wouldn't have had to put in. So there was a bit of money spent there, but other than that, there was really nothing hidden, no surprises, no nasty surprises. So it, it finished on budget. Now it also finished a month early.

Veronica Morgan: And I think that was a really interesting thing as well. And one of the reasons that it finished early was because these builders say sort of factor in most clients shop and change their mind or delay making decisions around various things throughout the process. And so if they'd factored that in, so I actually got to move in a month early compared to what we thought, which is as it turned out brilliant, because I literally moved in a month before lockdown last year. So we had worked, it worked out where the marvelously, but what I have to say, my big takeaway is make decisions early, invest the time making, you know, doing all your research, getting good advice and so that you can commit to those decisions. And then don't vacillate.

Chris Bates: Yeah. I guess it's when you had the advantage of sort of, you know, getting that expert advice from the architect and they were like, prodding you and saying, have you thought about this? Have you thought about that? And you're like, okay. And then and then the interior design has probably helped you, you know, speed up that process. Right. I think that the challenge we're finding with renovating is where haven't got the architects. They're not doing that sort of build, or we've got an interior designer, but then it's like, all right, now we're going to do windows. Okay. Well, I don't know nothing about we know, so now you've got to figure out. Yeah. And it's like you, you've only got so much mental capacity when you're balancing family and work and things like that. And so absolutely. I think it's about sort of, you know, getting as much of that research done while you still got that time, rather, as soon as you kick off the rhino and then bang, I've got to think about this next thing, because that's, when you make mistakes, you pick the wrong product to potentially over pay.

Chris Bates: You do things twice, et cetera. So it's investing a lot upfront. I find even if you're doing a rhino, I think that would be my advice for myself is to start, think through these things and do your research rather than when you get to that sort of stage. And there's a time pressure, and you're more likely to make mistakes.