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propertytalks Avoiding a reno nightmare Mark Taylor give some insider tips about how to avoid the most common renovation mistakes. Most of us know someone who's had a renovation disaster – everything from dodgy builders, budget blowouts and shoddy workmanship to legal tussles and months of seemingly endless misery. It never seems to be as easy as it looks on the TV reno shows. But don't despair – if you're clever you can make thousands in a short space of time, even if house prices are static. Here are my six pointers for getting it right. 1. Before you buy the house, ask three real estate agents if the street is a sought-after location, and if they know of any potential reasons why house prices may not rise in the future – you don't want to find there are plans for a giant sewerage plant over the garden fence! 2. Work out exactly how much profit you'll make from the project. This will mean considering every single cost. In terms of the building phase, you can produce preliminary cost estimates using material and labour indexes downloadable from www.archicentre.com.au. Always get three separate quotes from tradespeople and, if possible, choose those who have been recommended by friends or neighbours. To avoid costly time blowouts during the construction phase, add penalty clauses to any contracts you have with them to minimise the impact of time delays. And assume the project will take 20 per cent longer. 3. Crosscheck your renovation project with an independent property valuer who can give you a realistic idea of the property's increased value post reno. Unfortunately, too many people spend more on the renovation than they will ever get back when they sell. 4. Understand council approvals and requirements well in advance. Council approval can take anything from one to six months, depending on the renovation and the council. It would be disastrous to begin work, only to find you're denied permission. Your council website has information about renovations that require approvals, along with the processes involved. 5. Home owners who project manage the building work tend to end up spending more money, the project takes longer, stress levels go through the roof and the finished work is usually of a lower standard. Any money saved soon evaporates, leading to arguments at home and even divorce! Only consider 92 project managing if you understand the business and have excellent connections with the tradies you'll need. 6. Be clear on your exit strategy. If you plan to sell the house, factor in capital gains tax. If you intend to rent it out, know precisely how much more rent you'll get. If you're going to live in it, ensure you can pay back the loan or the increased amount of your mortgage. TOP five mistakes •Assuming you'll make a profit without properly looking into it. Some suburbs or towns will never be attractive, so high-end buyers will never want to live there, no matter how spectacular you make the house. •Making the property too quirky or tailoring it to your taste rather than to the majority's. •Not understanding the local market. If you create a family house in an area with no schools, the number of buyers will be limited. •Not checking contracts in detail to see exactly what's included. This can lead to unexpected bills for work you thought was already covered. •Uncovering major structural problems that would have shown up if you'd had a proper surveyor's report. Mark Taylor, our regular property columnist, is the founder and managing director of the Keys To Success Club, a must-have resource for anyone who is serious about property. Visit: www.keystosuccessclub.com/property