Ask Greg – The Block Effect

Comments (0) Ask Greg

My partner and I are looking to buy a “doer-upper” property in the Lighthouse Beach area. We’re planning to do as much of the work ourselves as possible, so we can maximise the profit when we sell. We’ve been advised to spend no more than 10% of the purchase price on the renovation.

Does this sound about right to you?
A: Your question is very timely Mitchell. I recently read an article about “The Block Effect”, which got me thinking about renovating and the discipline and common sense needed to ensure you don’t go overboard.
According to the article, “The Block Effect” is the term used by some sections of the building industry to describe the spike in demand for builders and trades when television renovation shows go to air. The data quoted indicates a sudden, measurable jump in people undertaking home improvements.

It is not hard to see how television could serve as a powerful motivator for people to renovate their homes. While this is obviously good news for home improvement-related businesses, I do wonder how many people let their aspiration for the perfect “before and after” story get a bit out of control.

Renovation show contestants can spend thousands of dollars on the latest designer bath for their multi-million dollar properties, but it’s unlikely to be a good investment for the typical renovation project in Port Macquarie.
There is no doubt renovating does add value to properties, but how much value will depend on how well you plan and execute your renovations and the purchase and sale of the property.

Whether 10% of the purchase price is right for you will depend on the state of the property you buy, your capabilities as renovators and on the value of surrounding properties. You need to establish what price renovated properties have been achieving in the immediate area to ensure you don’t overcapitalise.
If you would like to review the latest Lighthouse Beach sales data, please give me a call.
Answers are general comment, and readers should always seek their own independent professional advice.
Send your real estate questions to
greg@gregtrembath.com.au 
Greg Trembath is Principal/Licensee at
Greg Trembath Real Estate. Licensed Real Estate Agent – Licensed Auctioneer.

This article was from issue 116 of Greater Port Macquarie Focus.

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