The Block is over, and there is an hour-long hole in our evenings. Already we’re missing the daggy late night dancing, frantic shopping sprees and endless supply of coffee. We’re sitting on the couch flipping through Pintrest to get our interior design fix. And the memory of that final night, and the massive winnings, is quickly blotting out those scenes of stressed out tears, long nights and fights over the Cam Van.
We’re beginning to think… well we can do that, right?
Before we commit ourselves to purchasing a ‘renovator’s dream’ and making the big bucks, we thought we’d chat with an experienced renovator, Independent Property Group Sales Agent Helen Brennan to discuss the similarities and differences between The Block and flipping houses in real life.
So Helen, you didn’t watch The Block last night, but you heard all about it at work today, including the surprising auctioneering strategy (which we spoke to auctioneer Mark Larmer about) and the massive prize money. What are your thoughts on that?
It’s great for those guys that they won so much money from their hard work, but it’s not a very good example of real life. From an agent’s point of view, the reserves were set far too low. It makes for good television, but it’s a bit misleading if people think that’s what they can expect from flipping houses. Block contestants also have the advantage of massive exposure. The media attention is the jewel in the crown of real estate sales—and they get crazy media attention. I’m not sure the apartments would get that much if they weren’t the subject of a TV show.
PERSPECTIVE NOTE: According to news.com, resale values of The Block properties aren’t keeping pace with property price increases of other homes in those areas, suggesting that the initial purchase price was well above what it should be.
Ultimately how much profit you’re going to make depends on the market. The first home I renovated was a 3 bedroom house in Sydney. I turned the sunroom into a 4th bedroom for about $2,500, fixed the badly bowed roof for a minimal amount and made some other cosmetic renovations, but it was a poor market. The global financial crisis hit just before I was about to put the property back on the market. I decided to hold on to it for two years and sell it when the conditions were much better with a strong property market. In the end I sold it for $20,000 above reserve, which was close to $320,000 more than what I paid for the place to begin with, but a lot of this increase was due to market timing not just the renovation.
The second home I flipped was another 3 bedroom house. I added a second bathroom to the property. As I renovated I uncovered a lot of hidden problems, a dodgy toilet, asbestos, drainage problems, but adding the bathroom cost me about $7000 and added $50,000 to the value of the home. I managed to sell for $60,000 above reserve, and about $200,000 more than I bought it for.
But just remember out of these profits can come capital gains tax, stamp duty, holding costs, renovating costs, interest on the loans.
So you’ve seen some episodes of The Block, but you don’t follow it with the same fervour as we do. Why is that?
I find it irrelevant; it doesn’t mirror what renovating is like. There is lots of elbow grease in self-renovating; you’re up to your armpits in dust and dirt for months. The tedium of renovating—the long, long ours of boring painting—isn’t shown, because that would make for really bad television. For the block to achieve what they do in such a short amount of time would mean they would have an army of people working with them—that would cost a lot of money and eat into profits.
They are always running out of money on The Block. It’s part of the drama. Do you find the same when you’re renovating?
Not at all, because you have a certain budget for each room, and as long as you stick to that you’re fine. The contestants get these ideas in their heads that aren’t realistic, partly because they haven’t slept, and they’re feeling pressure to keep up with the others, to ‘win’ each week. They’re also on a deadline—that’s when you blow out your budget, when you’re doing things in a rush last minute or you get too emotionally involved.
Also, You should always add 10% contingency to your budget for emergencies. You never know what problems you’re going to uncover.
Renovating doesn’t have nearly the same amount of stress that The Block does. It’s not a competition; there isn’t that pressure to win. You don’t have judges coming through and criticising your work; you’re not trying to meet someone else’s expectations each time.
Don’t get me wrong, there are moments of stress. The guy that was supposed to lay the floors a week before auction date kept stalling—that caused a screaming match.
But I renovate by myself using contractors to do the work I either can’t do or are not qualified to do.
There is a massive emphasis on styling on The Block. To what extent does that mirror real life?
It’s important, because it gives the home depth and allows people to see what it might be like to live in, styling done right completes the image and makes the house even more appealing. To keep within budget I go to online sites like Graysonline and recycled building suppliers. Sometimes I might have something in my own home that I use, or I borrow artwork from friends. I’ve used milk crates as beds before and just thrown a quilt over it, because unlike The Block, you don’t include the furnishing in the sale. Ikea is a good place to go for the final bits and pieces.
Would you ever go on The Block?
Wow. That’s definitive.
I couldn’t work like that. It’s too much pressure; stuff is going everywhere. I wouldn’t be able to think clearly when there’s chaos like that.
So let’s say someone ignored your advice, and was lured by the temptation of nearly $900,000 pay for a few months’ work. What would your advice to them be?
Keep to a budget; don’t buy $400 cushions. Go to secondhand places to source materials. Sit down with your budget everyday so you know that you’re on track, but also sit down with your emotions everyday. If you think you’re going to lose it, take a few seconds, walk away. Once you get emotional, that’s when you’re going to waste money.
Also don’t take things too seriously – mistakes can be fixed, be flexible, have fun and take pride in what you’re achieving.
So, we’re not completely discouraged. But unfortunately there are no current auditions for The Block. We could audition for The Bachelor but would probably get in trouble for taking a jackhammer to the Bachelor Mansion. We may just need to sleep on it for a few weeks.