TWO years after completing extensive renovation work on her period home at Royal Terrace West in Dun Laoghaire — and just six months after moving into the house — Lisa O’Sullivan is selling up and is on the lookout for another project. While she expects to make a “decent amount” on the transaction, O’Sullivan says that, rather than doing it for the money, she’s motivated by a love of property and the wish to put her new-found experience to good use. “I want to do it perfectly, now that I know what the pitfalls are,” she says.
O’Sullivan and her husband, Patrick, paid €750,000 for the house in 2013 and it’s now back on the market for €1.35m. It’s what they call in the property trade a flip, and with property prices on the rise would-be flippers are looking to make a killing from the market.
There are a number of ways you could flip a property quickly. You could buy a property in an up-and-coming area, and hope that prices will rise. Alternatively, you could buy up a few adjoining properties and try to sell them on for a higher price. For many, the real buzz is to be had by turning a rundown pad into something much more habitable.
In between O’Sullivan buying and putting No 2 Royal Terrace West on the market, she “rebuilt it from top to bottom”, converting it into a single family home from three flats, making the basement level open plan, interconnecting two reception rooms on the first floor, replacing windows and replastering, as well as adding a new kitchen and bathroom.
The job was a lot bigger than she had envisaged and took about 12 months to complete. “The guy who previously owned the house was a builder and he did such a good job of putting the flats in that the demolition took twice as long and was twice as expensive as we thought it would be,” O’Sullivan says.
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Anyone who has watched Grand Designs or Room to Improve will know that delays on construction jobs tend to be par for the course. Whether you encounter structural problems, tardy workmen or planning delays, you will always hit snags along the way.
Renovating homes is a time-consuming and cash-absorbing business. Every euro spent — on buying the property or doing it up — should be factored carefully.
Taking on a period renovation is also a big deal: “I think people underestimate it — financially, time-wise and how it affects people living near you. When something goes wrong you can’t have a go at it yourself or just get anyone in to repair something. You need to get someone who knows what they’re doing,” says O’Sullivan.
The family was living abroad while the work was under way and O’Sullivan was project-managing it remotely. “That’s not something I’d advise,” she says.
Having a good team of people on whom you can depend is a hugely important aspect of being able to renovate and sell properties, according to auctioneer Felicity Fox. This is the reason it’s often easier for builders to do well. “If you’re relying on contractors and you’re not into project management, you might do it once and never again,” she says.
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People already in the business can also have the edge in terms of finding suitable properties. “As a builder you may be able to see an opportunity where it’s not that obvious to others,” says David Dobbs, associate director at estate agent DNG Dun Laoghaire.
“People who have experience with property know things that can be done that might not be apparent to the normal punter on the street — for example, adding an extension to the side of the house, converting the attic or adding an en suite bathroom.”
Potential pitfalls for would-be property flippers include not being able to get planning permission if it’s required. “You might decide you want to build a two-storey extension to the back of the property and not get planning approval, and that’s a risk,” says Dobbs. “Also, we’re relatively confident that the market will continue to be fairly strong, but obviously the biggest risk is if the market takes a turn.”
Timing can be everything. Some of the those who were worst hit in the recession were amateur flippers who bought at the wrong time. “Regardless of how quickly you move, there’s still going to be a time lag of a minimum of nine months between when you buy a property and put it on the market again,” adds Dobbs.
Overestimating the final value of a renovated property could also be a costly mistake. “You need to do your homework on what it’s going to be worth when it’s finished. That’s key because that’s your margin.”
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Despite all the challenges, O’Sullivan says she still loves property and wants to get involved with another renovation. “Now that I’ve found a team and a builder that I respect and get on well with, I feel that we could do it again.”
Her next project is unlikely to be as big as the last. “I’d go for something that maybe needed a new kitchen and bathroom, but the structural issues, and having to replaster inside and out, that was difficult, messy stuff,” she says.
No 2 Royal Terrace West is for sale through DNG; dng.ie
‘IF YOU DON’T GET THE
LOCATION RIGHT,
YOU’LL MAKE NO MONEY’
For Steven Van Den Bergh, buying run-down properties with potential, doing them up and putting them back on the market has developed into a business that employs seven people. “I’ve been building houses and extensions for a good few years, but it’s only since 2011 that I started buying properties in need of a lot of work,” he says. His company, Van Den Bergh Developments, renovates about 10 properties each year.
While he subcontracts work on the electrics, plumbing, kitchen and windows, his team does everything else, including stripping the property, insulating, replastering, putting in new floors and, in many cases, adding an extension. He usually has five properties on the go at any time.
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The team’s most recently completed property is No 7 Beechwood Grove, in Dun Laoghaire, which is on the market again through DNG after a seven-week renovation.
One of the main challenges, he says, is the length of time it takes to buy and sell properties, particularly since the introduction of the new regulations. The actual renovation is straightforward. “I’ve seen people get jobs done by builders in six months. We do the same job in two months because I don’t have a client to answer to,” he says.
Location is the most important factor for Van Den Bergh. “If you don’t get it right, you’ll make no money,” he says. “We finish to a high standard and in certain areas you will not get people paying for that standard.”
His advice to wannabe flippers is to ensure they have funds to complete the job. “Allow for a longer period of waiting than you anticipated. It takes time. I can do five properties by the time the first one is sold.”