Part 2 - 33.3% Return on Renovation

If you missed Part 1, click HERE to read about a 46.7% return on renovation of a condo.

As previously mentioned, I have been fortunate to work with sellers who want to maximize their return on their home. In doing so, we put together a plan to renovate their home, then list their property for sale. This approach is risky, takes capital, and patience from the home owners. But in the right urban situation, with the right team, the opportunity can create a ROR (return on renovation) of 30-100%.

A key to this equation is who will do the renovation? My wife, Diana Skellenger, is a female general contractor in Austin. For all my sellers, the only contractor I trust is Diana and her team at skellyhome.com. Skelly Home continues to lead the pack in quality, affordable construction. I must admit, I am on the team, but it's from a high level. :)

The second example is a home in Travis Heights. This home was purchased by the owners in 2005. Before the renovation, the home was worth $600,000 and looked like the following:

For this home, the plan was to renovate the entire home which included a kitchen, 2 bathrooms, wet bar, removing a load bearing pantry (seen in the top left photo), and paint the entire exterior.  The total budget for the renovation was $120,000 with a market price of $825,000. 

Yes, this is the same house. The renovation turned out as expected, outstanding! The home was listed, then sold for net $760,000, earning a return of renovation of 33.3%.

Math:

$760,000 - $600,000 = $160,000 Gross Gain on Renovation

$160,000 (Gross Profit on Renovation) - 120,000 (Renovation Cost) = $40,000 Net Return on Renovation  

$40,000 (Net Return on Renovation) / $120,000 (Renovation Cost) = 33.3% Return on Renovation

The Renovation approach can work with the right team. 

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Part 1 - 46.7% Return on Renovation

Typically, your home is your biggest investment. Over time, a home owner not only creates long lasting memories in their home, but also can grow significant equity at the same time. Once you grow out of your home or want to move neighborhoods, it's time to capture that equity or return.

I have been fortunate to work with sellers who want to maximize their return on their home. First, we put together a plan to renovate their home, then list their property for sale. Now, this renovation approach does not fit everyone. It takes risk, capital, and patience from the home owners. But in the right urban situation with the right team, the opportunity can create a ROR (return on renovation) of 30-100%.

A key to this equation is who will do the renovation? My wife, Diana Skellenger, is a female general contractor in Austin. For all my sellers, the only contractor I trust is Diana and her team at skellyhome.com. Skelly Home continues to lead the pack in quality, affordable construction. I must admit, I am on the team, but it's from a high level. :)

Part 1 - Return on Renovation of 46.7%

The first example is a condo. At the time of the sale, the condo was worth $225,000 and looked like the following:

For this space, the plan was to renovate the entire condo which included a kitchen, 2 bathrooms, removing a load bearing wall (adding a column for support) and creating a better storage solution in the current utility room (white pantry next to the kitchen and half bath).  The total budget for the renovation was $75,000 with a market price of $365,000. 

As you can see, the renovation turned out to be amazing. The condo was listed and sold for net $335,000, earning a return of renovation of 46.7%.

Math:

$335,000 - $225,000 = $110,000 Gross Gain on Renovation

$110,000 (Gross Profit on Renovation) - 75,000 (Renovation Cost) = $35,000 Net Return on Renovation  

$35,000 (Net Return on Renovation) / $75,000 (Renovation Cost) = 46.7% Return on Renovation

The Renovation approach can work with the right team.