Buy someone else's sleepless overcapitalised dream: The Renovators' maxim

As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.

Buy someone else’s dream. That was the obvious maxim after the six well-renovated houses sold at mostly mediocre prices in televised finale of The Renovators, the Channel Ten renovation reality series.

Based on the costs of purchase and renovation just two of the six offerings – Blacktown and Glebe – did well. Another two – St Peters and Castle Hill – fell well short.

The Blacktown fibro possibly won because the backyard pool was thrown in.

The overall results weren’t pretty, with three selling at a loss after taking into consideration purchase price and stamp duty plus the declared renovation budget of an additional 20%.

It’s not to suggest the Century 21 selling agents didn’t market the offerings well, given it was quite unusual for the flipping of such overcapitalised properties to hit the soft market in such quick time. Recent Residex figures showed that Blacktown was among the worst-performing Sydney suburbs, with 312 of 3,050 properties sold at a loss over the past three years.

Blacktown’s auction had competitive bidding though it appeared to be limited to a few bidders in the big crowd after 1,000 had been through the open for inspections. The least enthusiastic offering, Marrickville, attracted just the one offer, which was accepted.

The six houses were bought by the series producers for a $3.6 million total between December 2010 and March this year. They recouped at auction $4.14 million, a 15% gain. They were honest, but perhaps not typical, when they added the $120,000 stamp duty cost. They also had a declared renovation budget totalling at least $740,000, all with seven-year home owners’ warranty insurance.

The cheapest of all six offerings was the winner – the fibro cottage at 85 Harold Street, Blacktown, which also had the largest extension, along with expansive outdoor living areas and pool. Its renovation budget was $62,000 in a building contract with builders, H&N Khamis Pty Ltd, but that didn’t include the pool or the countless unpaid hours of work done by the contestant builders, Michael Lynch and team member, Jarrad O'Connell. "I worked it out that we spent $47,000 on materials,” Lynch says. “All the labour was done by Jarrad and myself.”

"I reckon I slept 18 to 20 hours in eight days. I had no choice, I had to stay awake and keep chipping away,” Lynch says.

The Blacktown property was bought in January this year for $299,500, with stamp duty of about $9,000 taking the costs up to about $309,000. It had previously traded at $270,000 in 2006 and had been listed with price hopes of $329,950 four months before its sale to the television series company. It sold through Penny Stylianou at Century 21 John Ross Combined Seven Hills for $440,000.

The next cheapest was Parramatta, where bidding began at $450,000 when the weatherboard, at 51 Franklin Street, Parramatta, sold at an auction with 100-plus attendees for $575,000, but only after the top bidder increased the offer by $5,000.

It had been last traded at $460,500, with stamp duty of $16,000 taking it to about $478,000.  It is now a modern family home with three bedrooms, two bathrooms with an entertaining space and backyard area. Its renovation budget was $95,000, making the breakeven point before its auction campaign conveyancing costs $573,8550. The extra bid took it 0.2% – or $1,145 – above its breakeven price. There were four obvious bidders. 

The 1915 Marrickville shop conversion offering fetched $700,000 in a one-bid auction. After costing $572,000 in March, or $595,000 after stamp duty of $21,000, the shop, at 146 Addison Road, Marrickville was transformed into a three-bedroom, one-bathroom abode. Its renovation budget was $119,000, so required a sale price higher than $713,676 to make a profit. It had previously sold at $68,000 in 1985.

The inner-city terrace, at 12 Hegarty Street, Glebe, cost the most at $720,000. Set on the smallest block of all six offerings – just 89 square metres – it is now a renovated 1890s three-bedroom, two-bathroom property featuring open-plan living. It was bought just a week after coming onto the market through Belle agent Mark Tooth and James Cahill in late January this year. It was sold through Thomas Skelly at Century 21 Cordeau Marshall for $925,000, seemingly to the opening bidder. The renovation budget was $150,000, so its breakeven point was $899,268 after the $28,000 stamp duty. It was described as now being the best house on the street. “She’s definitely got a bargain,” the renovator Luke Pollack noted post-auction.

After costing $642,500, plus $25,900 stamp duty, the half-done house at 5 Frederick Street, St Peters has an Edwardian facade with modern home behind it. Its renovation budget was $134,000, thereby requiring an $802,000 sale price to break even. It fell well short at $770,000, with Century 21 agents far outnumbering the two or three participants. Charles Tarbey, the boss at Century 21, was there to ensure that the bidding exceeded the $750,000 vendor bid.

The renovated 1960s suburban at 15 Anthony Road, Castle Hill, cost $607,500. The four-bedroom house sits on the largest land holding in the series of 765 square metres. It had been previously marketed with the “Renovate or Detonate!” suggestion for possible duplex building. The single-storey house renovation over the past three months had a budget of $126,000, thereby requiring $757,000 to break even, after including stamp duty costs of about $23,000. It was sold for $730,000 through Martin Baldacchino at Century 21 Castle Hill. It’s been the most actively traded of the show’s six offerings and amply highlights the ups, down and plateaus of Sydney’s property market over the decades. It had previously sold at $460,000 in 2006, when the then vendors tried without luck to secure $549,000 having bought in boomtime 2003 at $520,000. In 1994 it fetched $213,500 and four years earlier in 1990 it was sold at $205,000.

Century 21 Australia general manager Paul Mylott says strong results were achieved during fairly turbulent market conditions.

“The renovations were nothing short of superb and homeowners would be wise to take note of how a solid renovation can change the way a property is viewed and valued,” he says.

The internet advertising campaign run by Century 21 resulted in 90,000 online views with over 2,000 people inspecting the properties with dozens of interested parties registering to bid.

Most commentators suggest the results provide a valuable property lessons just like The Block 2011 in Melbourne.

Just one of the four Block cottages sold under the hammer, and all in quick time afterwards, and now they are possibly rented at terrific gross yields.

The ratings of the finale topped 1.26 million across the five cities, its best result since its 1.25 August debut sandwiched between the two-part Masterchef finale.

Some 56% of the $725,000 average nightly audience over the past three months were women. 

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