We Made $70,000 in 7 Weeks Optioning and Renovating!
Hi all we are Greg and Haley from Qld. We have been doing renovations of our own for quite a few years. I’m a licenced tradesman have done hundreds renovations for clients over the years.
I guess you could say property is in my blood. After talking to many clients while completing their renovations we decided to follow their footsteps and do some renovations ourselves – not that it’s always smooth sailing. I was looking for something different outside the box about property, when I was told about Mark Rolton and Options – so I decided to check him out.
Step 1: Getting Started
It started with a mid-week 1 hour preview night, I signed up that night for the 3 day live weekend option course. I attended the three day bootcamp and I left thinking about doing our next renovation under an Option using Mark’s valuable information and radical ideas.
Step 2: Find the Deal
We heard about this deal through a friend of ours, so we approached the owners with an option to renovate their property. The great part of an option meant that this time it was going to be very different for us and without the financial exposure that a normal renovation puts you under.
Step 3: Choosing the Right Strategy – Short Option
We knew from the start this deal was going to be a short option, combined with a huge effort (blood sweat and tears) but giving a very good return.
The optioned property comprised of negotiating with a married couple who had split up, she was very keen for us to get her out of a huge financial hole while living in the family home and was worried about the bank to foreclosing on them. The husband had moved out and stuck his head in the ground and didn’t want to take any responsibility for his actions. I guess you could say he was an uncooperative seller, as Mark says you are going to meet people like this when you are in the trenches doing deals.
We had two hurdles prior to commencing. Firstly the ex-husband signed off on the HOA and joint venture agreement and we paid 2 months of bank payments in arrears to be in good standing with the bank (Don’t need a foreclosure half way through a project.) We also put a caveate of $70,000 over the property, just in case if after the renovation she fell in love with it she must pay us 30 days after completion. She could not sign it fast enough and informed the ex-hubby to do the same.
So now we could finally start-all the work done was cosmetic improvements with no structural alterations. The house was an old 2 story weatherboard 3 bedroom -1 bathroom with potential to build in more living space downstairs. Mark talks about finding the Ultimate Buyer when you are putting a deal together. We knew who our Ultimate Buyer was going to be so we renovated the property to suit their needs and we did not alter the game plan.
We renovated the bathroom and toilet upstairs, painted walls, BUT the real money was in building a separate liveable space downstairs. We built in walls to create a new bedroom, lounge, kitchenette and a new bathroom. All these things are part of your feasibility when you are doing the numbers prior to starting.
Our aim from the beginning was to create a dual living house that worked for either a large family or a small family that wants their parents to live with them and that’s exactly who bought it – A married couple with 2 small children and mum.
Step 4: Know the Numbers
After we worked out the option price we knew we would come out with some good returns after taking into consideration the numbers on materials, legal fees, real estate fees, council fees,etc.
We knew the property prices in the area quite well, so we knew there was a good upside to the deal even on a bad day it still showed a good return – as Mark says know your numbers or walk away!
- Sale price $421,000
- Option $330,000
- Costs $20,913
- Profit $70,087
This deal was not for the faint hearted, we were prepared to put in the work for as long as it took to finish the renovation and claim the prize and that work for me was some very long days. But the prize was $70,000 for 7 weeks work.
Everyone was happy because the wife got $30,000 for allowing us to finish the renovation and we solved her problem by selling the house for her.
A big thankyou to Mark and the Massland team for your help and advice – it’s been fantastic!