Michelle’s Crack House Reno

“I could lose all the money tomorrow and still be happy if I have my renovating friends because they bring value to my life. We’re all growing as people together. We set goals, we achieve things, we support each other in the journey.“

Intro

Before we jump into the episode, I wanted to let you know that the Renovation Bootcamp doors are currently open and will be for the next couple of days. So if renovating has featured in your 2021 plans, and you would like some clarity around what you can achieve, a strategic plan for writing an extra a hundred thousand to your bottom line in 2021 and a proven system for achieving it, then come over to www.theschoolofrenovating.com/bootcamp and register your interest. We’ll be back in touch with you ASAP.

Bernadette Janson: Hello everyone. We’re back with another episode of She Renovates. Today I have one of my very favourite guest, Michelle Lewis.

Michelle has recently completed a project. So I thought we might have a little post-mortem on it.  If you’ve been listening for a while, you’ll remember that Michelle’s a little pocket rocket. She’s a budget renovator she generally does very low value renovations and turns out a great profit. She breaks all my rules or some of them, because I think she does a lot of DIY, but we’re going to get into that in a minute. So welcome Michelle.

Michelle Lewis:  Hey, Bernadette! Thanks so much for having me. I’m thrilled to be here as always.

Bernadette Janson: Awesome! So what we want to do is do a little exploration of your most recent project. I’ve got a little bit of a structure that I thought might work. Firstly, talking about your strategy because  our listener is generally trying to work out what they can do with renovating. So I thought if we use this structure, it really explains how this project fits into the puzzle. Firstly, the strategy, then we’ll talk about the location and then we’ll talk about the renovation. How does that sound?

Michelle Lewis: It sounds great. Yep! All good.

Bernadette Janson: Awesome. What was your plan? How did this fit into your plan going into the reno?

Michelle Lewis: So I think one thing to keep in mind when you’re renovating is to know your values and what makes you tick and what gets you excited.

So what gets me excited is buying a crack house or a dump and seeing the value in that that other people don’t see, being able to renovate that on an absolute budget and make a profit. So I love to buy in the low end of town, it’s affordable, it’s doable, the risks are low, the costs are low and the holding costs lower.

So my strategy is to turn it down into a livable safe home. Doesn’t have to be the high end of town. Doesn’t have to be the most expensive fixtures and fittings, but it needs to be clean and safe to weigh their rent out to people for the income or to sell, to make a chunk profit.

Bernadette Janson: Beautiful. So with this property, what was your plan? Was it a sell or a hold?

Michelle Lewis: I guess sometimes going in, we never know what we’re going to do, but this one , we got it at such a good deal. It seemed crazy  to flip it and take that chunk out, but to be able to hold it because obviously  that’s the strategy is to hold and have that income coming into our pockets. So that was probably what we were going to do. But as you always need a plan, A, B, and C with your investing, depending on what’s happening. And so it worked out beautifully that we could hold this and rent it out.

Bernadette Janson: Let’s talk about the location. So you’re in Adelaide?

Michelle Lewis: Yeah. We made a decision or we have in the last year made a decision to try and purchase properties within 15 minutes of our home. That’s for family reasons, we’ve got three young children and sometimes they need us and it is very convenient to be able to knit  out to the property to meet trades.

For us at this time in our lives, it really works. So there’s pros and cons to that. We all know you shouldn’t really necessarily buy your own backyard. It just happens that I’ve got potential deals in my backyard, which is fabulous. This property we bought is in Adelaide it’s a suburb called Sturt, which is close to the massive Marion shopping center, five minutes from the beach and probably about 15-20 minutes to Adelaide town. It’s, in my opinion, an underrated suburb with lots of housing trust flats, there are some social problems graffiti in the area, but as a renovator, we need to look past all of those things and see the development for what it is. And these suburbs change over time.

Since we’ve purchased that property one of those massive high-rise housing trust accommodation villages has been knocked down and they’re building new properties.  This suburb’s  undergoing gentrification, so massive amounts of new developments. So you’ve got to, you’ve got to look past all the beliefs of people in that area of what they think and see it for what it is.

Bernadette Janson: That’s amazing. I agree with you, but definitely you do need to be careful, like getting it early in the gentrification process is really good for buying and holding, but for the newbie, I think going into an area like that to buy and sell is often fraught with danger.

Michelle Lewis: Yeah. You definitely have to know your areas. I use a lot of my gut instinct and I have done for a long time, but not everyone has that. So then you need to get advice.

Bernadette Janson: No, it takes time. And that’s what you’ve worked on your craft. You’ve built that intelligence to be able to make those judgment calls and, yeah and that’s the pay off, isn’t it?

Michelle Lewis: I really had to look past interesting things that I saw that a lot of people were frightened of in the area. Too much detail. That’s another podcast in itself, but having lived in different spaces and opened my mind to different spaces, if you can look past some of these things that would put a lot of people off, there’s money to be made.

Bernadette Janson: So you’ve got that property rented out?

Michelle Lewis: Correct.

Bernadette Janson:  Was it challenging to find a decent tenant?

Michelle Lewis: No, we had people lined up and in actual fact, the tenant that won the property offered $25 above what we’re asking because she was desperate to get into the area. She worked locally, recently divorced and her children went to school , she fought for it.

That was a good agent that we had in there. Getting people on site and talking to them about the market and the market is hot for rental properties in Adelaide, really hot. I was a bit concerned about that, to be honest. Cause one of the houses next to us, the whole of  front fence is graffitied. I’m like, who’s going to want to live next to that? Apparently we had 15 people that did, and this lady is a very respectable lady. So it is interesting.

Bernadette Janson: That’s awesome. Okay. So now tell me about the house.

Michelle Lewis: Yeah. So this house we bought at auction. My husband actually found this house online and the day of the auction, I actually had my daughter’s birthday party, which I was going to sneak out of and go and beat. But I said to my husband, “I better stay. Why don’t you go?” So he rocked up. There were no other bidders, so in the ultimate situation no other bidders, and that’s because the property looked horrible, it looked terrible. It looked like a knockdown. It looked like a place no one would ever want to live.

And so the bidding started and they said to him, “would you like to open the bidding?” So I said I’ll pay $180,000. And so the process went down, of course, they wanted him to offer more, but there was no one else there to bid again. So of course. He didn’t offer more and we purchased the property for $190,000, which is way below market value.

Bernadette Janson: That is amazing.

Michelle Lewis: It is. It is amazing. Yeah.

Bernadette Janson: Wow.

Michelle Lewis: It’s a two-bedroom very airy open property, AKA some doors missing, doors that didn’t open or close properly. So it was purchased as a two bedroom, one bathroom property, and we reverted it back to its original three bedrooms status by opening up the hallway, which the previous owner had turned into a wardrobe, which is quite interesting. And we recreated that third bedroom. Polish, the beautiful jar floorboards. We did have to completely redo the bathroom. It was in such bad, knick. The roof had lots of holes and so there was a lot of rain damage to the ceiling. So we had to reach most of the house, including the ceilings. But once again, when you compare quotes and get some decent quotes, this can all be done within a budget.

And renovation did take four months, which is longer than we like.  The one previous within eight weeks, which was quite quick. But it was still a good wonderful achievement in that time we can garden shed out the back and some lawn, which we’ve never done. I find that exorbitant to have to put lawn in, but we really did need to in this property.

We had the property, we valued post renovation at $435,000. So with a better rental of 50K for the whole house, reclaimed rewired, re-gyprock, painted.

Bernadette Janson: So you would make about 180, 000?

Michelle Lewis: Yes.

Bernadette Janson: Wow!

Michelle Lewis: Isn’t that cool?

Bernadette Janson: That is incredible.

Michelle Lewis: The thing I love about the most is that many of our projects we purchased under $200,000. So people say you can’t do this. You can’t do that. Actually, yes, you can. You just have to be willing to take on I guess you’re right, Bernadette it comes with time and experience. Not probably not a first time renovators project.

Bernadette Janson: Yes, exactly. The other thing is it also does depend on your location. The project I just did the budget was 60,000, which I didn’t think was too bad, but that’s absolute rock bottom because like we’re just paying so much for our trades. And we have to expect to, they have to live in an expensive city.  They’ve got to eat just like we do, unfortunately. Fortunately for you, I think that makes a big difference.

Michelle Lewis: Yes, it does. We are lucky costs are lower here in Adelaide and trades cost less.  That’s a bonus.

Bernadette Janson: Yeah.  I’ll get the girls to add some photos of your property to the notes. Something that I really loved about it is the fact that you put in a second hand kitchen.

Michelle Lewis: Oh, yes. So that’s a regular strategy of mine is to either upgrade the current kitchen, which we have done with those kits from Bunnings we put a new surface resurfacing product, but what we find works best is a hand kitchen off of Gumtree. So this one, I think it bargained it down to $750. Fantastic. Cabinetry, nothing wrong with it.

I just always try to stress to people, everyone thinks you have to have a perfect house, post renovation. We’re an actual fact most people live in a secondhand home. Most people have one kitchens. It’s not normal to have a brand new anything. So you can absolutely use things with a few chips and things that are a bit dirty. So scrub that out. We did have to add some cabinetry to it. So even if you buy your second hand kitchen, you can go into Bunnings and get an oven cabinet, for example, or an extra, you can make it work. You just have to keep your mind open to possibility. And then I get a new bench top to feed it for that space that we recreate with the cabinetry. Cause the cabinetry is all standard. So fairly standard anyway, unless you have it particularly custom made. Yeah, so it’s great fun. And I put some down three downlights pendant lights in that I got off Gumtree for $10 each. You don’t have to spend a lot of money.

Bernadette Janson: That’s Epic. And tell me how did you go about the bathroom?

Michelle Lewis: The bathroom I normally like to tile on top of tile but my tiler convinced me to take up the tile. So  I said, “okay, no worries.” So we did that and we kept the original bath. That’s the only thing we kept, because that was quite good. The ceiling was made of -it’s I’m just trying to think of the name of the brown, old particle board stuff that is not even a proper thing. That stuff was falling in on the roof and a terrible sudden rave.

So basically, yeah, we took all that out. I got my carpenters to line the bathroom and then my tiler waterproof to end tiled it. And we obviously, we connected up the toilet. My friend, Gina bless her, she found a vanity on the side of the road. She rang me up, “Michelle there’s a vanity,” and I said, “quick, Gina, get down there, put it in the back of the car.”

We’ve put in off the side of the road vanity in this property as well. It was a bit marked in the basin, but again, it’s a rental property. People don’t expect to have brand new. So I fixed that up a bit in it. Yeah, it’s on the property. Cost me nothing.

Bernadette Janson: Beautiful. And what did you do with flooring?

Michelle Lewis: We were very excited to find the beautiful jarrah flooring under the  filthy carpet. We polished the floors and that came up beautifully and tiled the original laundry. And then there was  another area there that we tiled. We actually made that into a butler’s pantry. So we tiled that as well. So with the leftover kitchen, we made a butler’s pantry, which is really fun, and everyone loved that.

Bernadette Janson: Wow! Wow. So what was your biggest challenge?

Michelle Lewis: It’s such a silly thing, but my biggest challenge was choosing the external paint colour. So this house was an ugly duckling , also an asbestos clad  housing. So we actually removed 75% of the asbestos and replaced that with a blue board. One of the creative aspects of buying an ugly duckling is trying to make it look lovely so that someone wants to live there. And so eventually I chose 150% tranquil retreat as the main house colour, but I spent way too much time on that. And lesson learned, they’re all good colours,” get over it Michelle, move on, pick a colour. “

We also divided up the house by putting a fence halfway to create a backyard. That gave it a bit more character and we did a few other bits and pieces. That was probably in a funny way, the biggest challenge, because normally I don’t get  too caught up because with a budget renovation, you don’t have to stress about being it perfect. You can just go “that we’ll do” as long as it’s clean, safe, and functional, it doesn’t matter.

Bernadette Janson: Absolutely. So how much of the work did you do yourself?

Michelle Lewis: Most of it was me managing the trades. My husband and the kids get involved. So we do a lot of the demolition and anything that doesn’t require a license, but the majority of the work is done by paid trades people. I let my husband do as much as he wants, and then I fill in the gaps.

Bernadette Janson: Okay. So I must admit I was under the impression that you did a lot, so I’m happy to hear that.

Michelle Lewis: I don’t really have the skills or the time to do that  with the children at the moment.

Bernadette Janson: Awesome.  In terms of your husband being married to a renovator. What does he think about what you do?

Michelle Lewis: To be honest, he started our investing journey many years ago when I was busy having young children. He got quite interested in it and it wasn’t really until 2012 that I really started educating myself and took over the job as the main investor in the family while he works full time. He’s a hundred percent supportive. I do all of the project management and as I say, I let him do whatever he wants and then I fill in the gaps. But I think it’s important to note and this comes back to mindset and self-belief that I can do it without him.

If the case was that he didn’t want to bother. I could still do it. And I think women really need to let themselves know that. Yes. Okay. You might have to spend a few more dollars if you haven’t got that in-house person to help, but you can absolutely still do it. It’s really important.

Bernadette Janson: Yeah.  I agree.

Michelle Lewis: I think the thing is number one, get educated obviously, if people have joined your program is really important. You can save hundreds and thousands of dollars by having a mentor, having someone that can help prevent you from making mistakes.

I wished in hindsight that I had mentors earlier than I had, but you don’t know what you don’t know until you don’t know if that makes sense. Definitely get amongst the group. So obviously being in this group is wonderful, but don’t be afraid to join other groups, make your own group. The more people that you surround yourself with that are involved in investing, the more you can learn.

I also like to think outside my state. So meet people, interstate overseas, doing different adventures, just keep learning and keep learning. And obviously the biggest thing is to take action. You can learn and learn, but until you make that phone call to buy that house, put in that offer, you’re not going to make, change your life.

Bernadette Janson:  Absolutely agree. And I do think some people naval guys for way too long. And if you take baby steps and move forward cautiously you’re not risking too much.

Michelle Lewis: Yeah. And one of the biggest things I think is go befriend people who are doing projects and see what they’re doing, get your foot inside the door and copycat them too, learn from them. You’ve just gotta put yourself out there. And I have a little bit of a thing which comes back to the Mel Robbins five second rule of when you wake up in the morning, you just have to get up. I made a decision one day because you know how you write an email and you think, “oh, should I send that? Should I not send that?” Well I make the decision to just send whatever I wrote, post to whatever I wrote and get over it because who knows the most greatest things might happen from those situations. You’ve got to stop questioning yourself all the time.

Bernadette Janson: I agree with that. And it’s really funny because I am married to Stephen and he is the exact opposite. I’m someone that just jumps in and does it. Let’s have a go and see how it goes, where he’s the exact opposite. And I’ve really found some times that I’m starting to think, “oh, should I be doing that?” And then I said to him, the other day cause I was saying something and his first thing is have, like basically something negative. And I don’t want to hear it. I do not want to hear it because unless it’s constructive where I’m just doing it and that’s it. So he said, “okay, fair enough.” Because otherwise it does it niggles away at you.

Michelle Lewis: Yeah. It really can prohibit your growth. And you’re a fantastic example of that because the first time we did a podcast, you wouldn’t have been in a perfect exact situation, you just went and did it, and that’s what you have to do. So you inspire me in that regard, Bernadette.

Bernadette Janson: Thank you, Michelle. I think it’s a bit like renovating. You have to be willing to accept that what you do is not going to be perfect, but I always look at it and I think  “, you know what? I’m ahead of 90% of the crowd because I’m getting out and having a go. ” And the only way that you get better is by having a go and keeping at it until you do get better without taking ridiculous risks.

Michelle Lewis: Yes.

Bernadette Janson: Actually on that note of getting out and shadowing your friends who are doing it. I also think that’s a great idea. And one of the things that I am doing at the moment, and it’s  really coming together. I’m putting together a big Joint Venture. Basically, because interest rates are so low, I’m still struggling to think of a name for it.  So I can’t be more formal in how I talk about it, but because the interest rates are so low, I thought there’s probably lots of people with a bit of money that would love to invest in a project. And so for our teaching project, I think it’ll probably end up being about 12 people, but we can have up to 20 people invest in that. And so we will be doing our teaching project in cash.

And what I’m going to do is I’ll probably mentor someone with that along the line, but it’ll mean that any of our students who want to come along and be part of that can just turn up and come over and have a look at it. I’ll do a daily video into the Facebook group so everyone knows what’s happening that day.

And so that goes some way towards offering that opportunity for potential renovators to start getting a bit of onsite experience.

Michelle Lewis: Yeah, that sounds great. What a great opportunity.

Bernadette Janson: Yeah. It’s exciting. So now what’s next for you?

Michelle Lewis: I’m quite focused on setting up our  self managed super fund. So some of you may have already done that or might not be at a stage where you’re thinking about that, but that’s a big focus for me. Possibly to then lend that money to developers to make some profit, which will then stay in my super, because it’s not money you can take out. So there’s a lot to be learned in that space and I’ve listened to Bernadette’s podcast on that. So that was really helpful.

Then also looking into joint ventures. So me running projects with other people funding it. Or putting in some money. So building those JV partnerships.

Bernadette Janson:  That’s awesome. As I said you’ve come to the right place because we’re really nailing that model and with the help of Property Circles, that’s just made a massive difference.

Michelle Lewis: Yeah, that’s really exciting. I’m looking forward to it.

Bernadette Janson:  Yeah.  Listen, I think we have done a suitable post-mortem on your project. Congratulations! Another feather in your cap. You’re an absolute inspiration to all of us, Michelle. It’s just lovely to see you doing so well and blossoming. By the way, you’re still nursing?

Michelle Lewis: I do about one shift a week for love and of course, banks love you bringing in a little bit of income. So I still do that and of course nursing is wonderful because you can do that. But I can also take time off when I need to.  I just wanted to say to everyone that you have to start somewhere.   You can play tricks on your mind and perhaps you say “I’ll just do this one project, then I never have to do it ever again,” but how amazing it can be if that project goes really well, but don’t give up if it doesn’t. We all have the ability to choose and change our lives and to make choices. Just get some mindset training if you’re not ready already in that space, because that helps a great deal.

Bernadette Janson: I agree with that. And it’s funny, you might know, we just finished a project in Chalmers street in Sydney, and I just had a conversation  with a young man that had just bought a property in that building. He saw what we did. It got him interested in investing and property buying and selling renovations . And like really looking around and looking at what other people do, it’s a great source of inspiration. Also, you’re talking about being in lots of groups. I really agree with that because  it’s what other people do that it basically shows you evidence that it’s possible. And sometimes you need that  to get started at least .

Once you’ve built up your muscle and you’ve got your mindset in the right place, then you’ll become a self-starter. But until you get to that point, really looking at what other people are doing and how they’re doing it, which is why I really appreciate you coming on to the podcast, Michelle, because  I  don’t do any budget renovations. It’s not that I’m against it. I’d love to, but  unfortunately where we are, you’re just  talking a lot of money. It just gives you that inspiration and lets you know what’s possible, which is a great driver.

And the other thing I was going to say which I’m sure you will agree, it’s not even just the profit. Not that you should be doing it, not making profit, but it’s really the journey, the people that you share your stories with. It’s a great place to be. Would you agree?

Michelle Lewis: Oh, my goodness. Yeah. So for me, I could lose all the money tomorrow and still be happy if I have my renovating friends, because they bring value to my life, we’re all growing as people together, we set goals, we achieve things, we support each other in the journey. It’s actually, for me the ultimate, it’s community. Get yourself out there. Meet lots of different people. Bernadette will be the first one to tell you, you don’t have to just be in her group. We bring together from so many groups.

Bernadette Janson: Absolutely.  I’m going to declare this episode, done. So for anyone that is listening, who would like to maybe ask Michelle some questions. I hope this is okay, Michelle, because I just thought of this now , please come over to the She Renovates free Facebook group. Michelle and I are both in there and  ask away. I Come into the group every Thursday and do a live at 12:30PM. So that’s the next thing I’ll be doing today.  Generally, it’s just, what’s going on inside our community and you know what we’re doing, but that’s the first group that you can join if you’re not already in a group to start building your renovation inspiration.

So thank you very much for being on the call, Michelle. I really appreciate your time.

Michelle Lewis: You’re so welcome. Great to chat to everyone. Look forward to seeing you on the She Renovates Facebook page, and have a great day and take action. Thanks Bernadette!

Bernadette Janson: Thank you, Michelle!