147 – How To Negotiate The Renovation Challenges Of Covid
Completing your renovation challenges during COVID-19 demands a high level of confidence in all aspects especially with your trades. This includes clear communication and thorough preparation which ensures that everyone and everything is on the same page.
How To Negotiate The Renovation Challenges Of Covid
- [01:37] Managing trades and sourcing property amidst the pandemic
- [02:51] Making sure to manage risks and to look for opportunities
- [04:59] Tips to help you continue to function confidently despite uncertainties
- [06:19] Limiting beliefs: The biggest hurdle you need to overcome
- [08:22] The value of building a team and professional relationships
- [10:31] Checking your mindset
- [12:38] Allowing extra buffer in your renovation budget
- [14:28] Strategies for trades who don’t want to spend time quoting
- [16:24] Availability of supplies has been challenging since COVID19
- [17:31] APRA’s new lending policies in terms of serviceability
- [19:29] Importance of having a substantial plan
- [20:17] New South Wales opened up this week
- [22:15] Darley St. and Newcastle project Updates
- [24:11] Bernadette bought first website: My third fur baby guide
I personally believe it is appropriate to be prudent. But to come to a grinding halt and not move one way or the other because of uncertainty, would be a crying shame. The reality is… there is always something to worry about. So, getting comfortable with change and being able to flex and bend with it is the name of game.”
~ Bernadette Janson
Renovation Challenges During The Pandemic
Getting comfortable with change and being able to flex and bend with it is the name of game. It is appropriate to be prudent but to come to a grinding halt and not move one way or the other, because the ground is shifting, for want of a better expression. If you are relying on income from your renovating, you are not going to get the outcome you want. I believe with great change comes great opportunity.
To put s project on hold because of uncertainty or different renovation challenges would be a crying shame. In reality, there is always something to worry about.
Main Renovation Challenges Encountered
- Uncertainty in the market. We didn’t know how the market would respond to the lockdowns. It went exactly the other way and has skyrocketed. We have had very good growth in the last 12 months which creates renovation challenges because you need to be able to buy well to make a profit on your renovation. If you don’t, then you’ll be sunk from day one and that’s critical.
- Availability of skilled and unskilled labour. There’s been a huge shortage of it.
- Shortage of materials and the unreliability of supply.
Sourcing Properties and Other Renovation Challenges
Before looking for a property, make sure that you’re organised and that you’ve already got pre-approval for finance so you are set to go and you can move quickly. Being able to source the property has been required. It’s signing, organising or waiving the cooling-off period which means you have to miss out on a few deals because you need to adjust to the circumstances of the environment. The biggest hurdle that you need to deal with is your own limiting beliefs. It is hard to get a property at the right price and you don’t have to look too far to find an example that will support that evidence.
There is a recent story in the news about properties going several hundred thousand over the reserve. It’s hard to have the belief that you won’t have to do the same.
The Value Of Building A Team And Professional Relationships
I have a little rule of thumb that I like the vendor to pay the stamp duty which means that I’d like to buy the property sufficiently undervalued to the tune of the stamp duty. I’ve been able to continue to do that even in these crazy times. Just be persistent and know that there is a deal out there for you.
The other side of that is that relationships are everything. They say there’s no ‘I’ in Team and this business is something that you can’t do in isolation. You need some help from your friends, not just your renovating friends but the professionals you work with. Having a professional team and support mechanism is really what’s going to get you through.
You want to build your team in good times so you have those enduring relationships no matter what. The value of a relationship has never been more important because a lot of people have closed their books. Not just buyers’ agents but general builders are not taking on new clients because they are so under the pump.
Sourcing The Property Despite Renovation Challenges
- Check your mindset and make sure that what you’re about to do is supportive of the outcome that you’re after.
- Be creative about how you’re going to go about it and use the negatives as a positive.
- If there’s an area in lockdown, that’s sometimes an opportunity to do your due diligence without inspecting. Get a friend or someone local to inspect for you. You can also try inspecting over FaceTime which we’ve done before and that’s a way of getting ahead of the curve.
We have seen a couple of good deals happening as a result of adopting this attitude. It’s important to build your professional structure before you encounter rough times. It’s hard to do now that we’re in it because anyone good at sourcing property is very busy. If you’ve got relationships with good buyer’s agents, you will find that those people will be able to help you source the property.
Finding The Right People To Do The Work
Keep your contacts intact. Nowadays, the building industry is under a lot of pressure, so our current Class Project in Newcastle so it’s been hard to manage our budget. I had a situation last week where the builder that was working on our project pulled up stumps. I had to find someone fairly quickly. When it first happened, I thought, “how am I going to deal with this?”, but then I got into action mode.
I think the best thing I find is when someone tells me I can’t do it. That’s just like red rag to a bull. It’s a matter of using your networks. I ended up ringing people I haven’t spoken to for quite a long time because our circles don’t cross anymore.
Negotiate with tradies. Trades are not wanting to spend the time quoting which also makes it challenging. You need to think about some strategies around that like negotiating a day rate and then just monitoring the work. You should never give someone an open cheque book. That can be dangerous, but you need to be a little bit flexible because if you want the work done, you need to be flexible to get it done. Look at how you can modify your plan to limit the amount of labour you need.
Renovation Challenges With Flat-pack Kitchens
Why flat pack kitchen? It’s because kitchen manufacturers are booked up and we’ll have more control over the cost and the project. On the other hand, we have come to a decision that we are not going to do a Bunnings flat pack.
We discovered that anything other than gloss and Melamine is a six to eight-week wait for most of their higher-end finishes like vacuum-form. Even in the display, the vacuum-form was letting go. The last thing we want to do is put a new kitchen and have our buyer be disappointed within a few months when we know the finish starts popping. We want to make sure what we are putting in is quality. Researching custom flat packs, so much better quality and that’s how we are planning to go. Everything else we are getting off the shelf as much as possible so we’re not dependent on suppliers where possible.
Availability Of Supplies Has Been Challenging Since Covid19
The other thing that has been very challenging since the beginning of COVID19 is the availability of supplies. You would go and say, “do your tapware order and find that.” At least half a dozen things were out of stock and the lead time on them can be weeks or even months.
The way that we are managing that is by making sure to order things well ahead of time. If there are any shortfalls in the supply, you still have time to do something about it. The other thing is we try to source locally as much as possible because freight as well is quite unpredictable just like a lot of the tiling companies in Queensland.
APRA’s New Lending Policies
APRA (Australian Prudential Regulation Authority) announced its changes to the lending policies in terms of serviceability. They are adding a half a percent interest buffer so that you need to bank on your repayments. It’s 3% higher than what you’re paying to get a loan in the serviceability calculations. That comes as no surprise and we would be expecting more of that because most of the buying public needs to have saved more for themselves, paying three, four, 500,000 above the market value of a property. It can create an enormous affordability problem. We need to be operating as if something could go wrong tomorrow.
“If something negative happens in the market, then that is the best way to move forward with your activity in these trying times.”
~ Bernadette Janson
She Renovates Facebook Group
If you want to meet up with a group of savvy renovators. I would say come over and join She Renovates Facebook Group. It’s a completely FREE Facebook group and it is growing at the rate of knots.