Investing in real estate was far from the minds of Nick and Jacqui Hart when they bought what they thought would be their long-term family home in Flagstaff Hill on Adelaide’s southern fringe.
But a growing family meant the property soon became unsuitable and left Nick, 38, and Jacqui, 33, with a decision to make.
“It’s a five-bedroom house, and when we bought it we thought we’d be living in it for the next 10 to 15 years or so. But then we had another child and it didn’t really suit our needs any more. When we bought the house it needed some work, and we’d redecorated and redone the kitchen and bathroom,” Nick says.
“We were left with a choice to make: we could either sell it and move on or rent it out and find another property.
I went and spoke to a broker and he said we would get the rent we needed from the house and we could draw down some of the equity we had built up to buy the next property,” he says.
The Harts decided to go down the route recommended by their broker, which has now seen them renovate a further three properties, all while living in them with their four children.
The Harts’ portfolio is now made up of four properties worth just over $1.6m and has been put together by following a careful strategy.
“What we’ve done is target rundown houses that we can try and get for around $40,000 to $60,000 under market value. We’ve found that if a house has a bad kitchen or bathroom you can usually pick it up for much cheaper because these are the rooms people focus on,” Nick says.
“They’re also the rooms you get the most bang for your buck from in terms of increasing the equity in the house. We might do some more decorative work on the rest of the house, but we focus mainly on the kitchen and bathroom.”
Rather than renovate and then look to sell the properties, the Harts have elected to hold on to each completed project and draw down on the improved equity, which is why Nick places heavy emphasis on tracking their budget.
For a quality kitchen or bathroom renovation the Harts budget to spend $10,000 to $30,000, and after deciding on their outlay they do their utmost to stick to it.
“The budgeting side of things really underlies if you’ll be successful or not, and that’s one of the biggest things we’ve learnt from our experiences,” Nick says.
“When we start a project we put together a strong estimate of what the equity improvement will be and how much we plan on spending. From there we really try to keep track on a day-to-day basis of where the money is going, and that’s really helped us make sure that we’re doing the right thing as we move through each project.” READ MORE