Luke Jorgensen, from Lush Property, outside a house he has just ‘flipped’.
Photo by
Rechelle Zammit
It feels like house renovation programs have taken over our television screens, which is probably reflective of most people having at least a passing interest in the possibility of making money out of improving houses.
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STORY: MURRAY SILBY. PHOTOGRAPHY: RECHELLE ZAMMIT
The American term for turning a quick profit on a house renovation is ‘flipping’, and it is quickly taking hold here in the Australian vernacular.
Before: The front yard was invigorated by removing overgrown plants and trees.
The idea is that you buy a reasonably priced house with good ‘bones’, and make necessary and cosmetic renovations to it before returning it to the market for a profit.
One Goulburn Valley business with experience in the practice, both on its own and in partnership with customers, is Lush Property.
Kurt Jorgensen, from Lush Property, said the Shepparton market had experienced great growth in recent years, but there were still good options for people interested in flipping.
“It’s still good value,” Kurt said.
“During COVID, and up until the start of this year, getting a property that was — let's call it a gem or money-maker — was like trying to pull the card out of a deck that wasn't a joker.
“So in that scenario you're almost guaranteed to have made money, and now it's like trying to pull the jokers out of a deck of cards.
“Not every property will make you money in the short-term. There are still those few diamonds in the rough though, and that's what we look for.”
Cupboards were retained in the kitchen and tiles painted rather than replaced to save on renovation costs.
Photo by
Rechelle Zammit
Kurt has just finished a house renovation in Shepparton South in partnership with a client.
Before: The new flooring and some additions refreshed the kitchen space.
“Between the purchase price and what it's under offer for is $115,000 difference, and then the bank actually did a drive-by valuation the day that we locked this up, and they valued it $5000 less than what it actually sold for,” he said.
“So not only was a purchaser willing to pay that amount, but the bank was willing to value it at that as well.
“The total renovation budget was $18,500 and it was achieved in, realistically, about five-and-a-half, call it six, weeks.”
Luke Jorgensen, and his company Lush Property, can advise clients on getting the right balance between cost and return.
Photo by
Rechelle Zammit
Before: A fresh look was created by keeping a white palette and removing the ‘marble’ lino.
The renovation included replacing flooring, painting, upgrading lighting and tidying up the garden.
Kurt said local knowledge was the key to success, however, to avoid paying too much for the property in the initial purchase and then not overspending on the renovation.
“It's just knowing where to spend the money to get the right amount of uplift and when not to spend money,” he said.
“I could have gone and put in a pool at $80,000, but does that translate to even $80,000 of uplift? Maybe, but is it worth 90, 100? We try and get at least $2 back for every dollar that we spend.”
Lush Property offers buyer’s advocate services and can also enter partnerships with clients to ‘flip’ or renovate properties for profit.
Lush Property can enter into partnerships with people seeking assistance with flipping, or preparing properties they already own, in order to help them get the best economic outcome possible.
“The most common way, and the best way for everyone involved, is a profit share arrangement, because at the end of the day, if the owner makes more money, I make more money, they get helped, I get helped, everyone wins, rather than if I came in and had a fixed cost,” Kurt said.
“The risk is on me, not on the owner, because at the end of the day, the property — if it was purchased for X, pick a number — once it's renovated, it's going to be worth at least that number anyway.
“So there's no risk to the owner. The risk is for me to make sure that I don't overspend, but maximise value, in order to get the best outcome for everyone involved.”
A basic makeover of a garden can make all the difference when selling a property.
Kurt and Lush Property can also operate as a buyer’s advocate, introducing buyers to potential purchases in the region.
“So the company offers a range of property services,” he said.
“We do valuations, we do consulting for renovations, we do the renovations, we do joint ventures for development, buyer’s advocacy as well, which was quite strong through COVID-19, especially the interstate and Melbourne-based investors wanting to get into Shepparton, but couldn't get into the state or get out of Melbourne.
“The key thing is, especially with renovations, people get too caught up in the romance of [television program] The Block.
“So they'll look at and see a kitchen and go, ‘Oh I should put in 40mm stone bench tops’, which will cost you $10,000 — well this whole renovation cost 18-and-a-half and of that, half of it was floor coverings.
“Knowledge of the local area or your target area is what pays dividends.”
