Real estate Tips

The Block 2012 Dissected

by admin on July 2, 2012

The Block 2012What Really Happened On The Block 2012

It was good entertainment but what really happened on The Block 2012

Lets take a look.

The 4 properties were bought by Channel 9 for $3,025,000.

That equals $756,250 each property.

Lets say the renovation on each is estimated to cost $500,000 in the real world. That’s a cost price per house of $1,256,000 aprox.

Add marketing and agency fees and stamp duty, and each owners cost is above $1.3 million.

The reserves $900K’s?

Did Channel 9 have any influence over the reserve?

Who cares? It was good tv.

Point being, an owner in the Real World would probable have lost money on the deal if they bought renovated and sold.

Ok I’m being a party pooper…The block 2012 Final was good TV…but what about the t-shirt guy?

The t-shirt guy was the new CEO of ************(I’m not naming the company but no prize for guessing).

There is a lot of debate over the companies involvement in a property acquisition when they are allegedly in administration.

But full credit to him. Smart man. National coverage on prime time TV and throwing in attention seeking bids. Twitter was going nuts with the tshirt mans company. That is very, very valuable advertising space.

There was over 4 million viewers alone. Not to mention social media going nuts.

I hope his cheque doesn’t bounce.

Anyway, if you have been on planet Mars and missed the result.

And the winner is:

Winners The Block 2012 Brad and Lara

And for those willing to take a punt. here is an extract from a property forum about renovating in 2012. I think the tide has turned and we are in for some good Real Estate times:

” By Patrick Bright, Thursday, 05 January 2012

The secret to renovating for profit is in selecting the right property, conducting thorough research and having a good plan. It is important that the type of renovation projects you attempt is in line with your level of knowledge, skills and tradespeople contacts. There are literally hundreds of improvements, big and small, that you could do to increase the value of their property. By using some common sense I believe most people can handle a basic rejuvenation without too many dramas. The trick is to add more value than the actual cost of the improvements. This is my seven-step plan to renovate properties for profit:

Step 1: Understand the renovation profit formula
In simple terms the renovation formula is: Your renovation profits margin equals the renovated value of the property minus the purchase price and total renovation costs. Once you understand the theory you’ll see where the profits lie. The formula is like the filter through which you view a property.

Step 2: Work out how much you can afford
You need to have enough saved to cover the three major costs of renovating: the cost of buying the property, the cost of renovating the property and the selling costs or the ongoing costs to hold the property.

Step 3: Target the right type of property
Match your risk profile to the right type of property. Before buying a property to renovate it is important to consider your risk profile carefully, including how comfortable you are with the possibility of losing money, or that the return on investment may not be as high as you had hoped for. If you’re new to property investing and/or you’ve never renovated a property before, I recommend you cut your teeth on a simple project. Start off with an apartment – it’s better to start small to minimise your risks.

Step 4: Market research and preparation
This involves identifying suburbs with the greatest profit potential, researching property values, brushing up on design and decorating, and selecting a team of quality tradespeople.

Step 5: Select the right property type
Look for a property with the maximum profit potential. Your first consideration here should be the condition of the property. Search for something rundown, but not totally derelict.

Step 6: Pay the right price
Work out the maximum you can afford to pay and still make a healthy profit. One of the fundamentals of renovating for profit is that you buy well. I always begin with the end in mind, by that I mean I work out what the post-renovated value will be, the costs to get it in that state, calculate the holding costs, decide on the amount of profit I want to make then I know my maximum purchase price.

Step 7: Get the work done on time and within your budget
Avoid profit-shrinking cost overruns and delays. Make sure you use a spread sheet to schedule the works. You need to ensure all the tradespeople do their work in the right sequence. Always add a buffer of a day or so around each tradesperson. This gives you wiggle room if there are delays. ”

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