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October 2, 2015

A fast reno adding $75,000 in equity – 20 years in the making!


A less than impressive valuation coupled with redundancy spurred this couple to finally renovate their family home and gain $75,000 more equity.

Chris and Karen Christoff, like many of us, had a pot of untapped wealth in the four walls they called home.

The Gold Coast couple have always loved rolling up their sleeves and working on their homes and have had some investment success over the past 30 years.

But raising three children together with Chris’s career in IT, which often demanded 60 to 80 hours a week, meant for almost two decades they lived surrounded by a litany of unfinished home improvements… until last year.

Motivated by other investment goals, a sudden job loss and guests arriving for Christmas, they said “enough is enough” and took on their home’s boots-and-all renovation completion.

Four weeks later they’d made more than $75,000 from their biggest asset.

“We knew we had the equity in our house and we just needed to access it,” Chris says.

But the couple’s flair for breathing new life into tired bricks and mortar was apparent back in 1984 with their first investment, a rundown Queenslander in the Brisbane suburb of Windsor.

Karen and Chris Christoff

Karen and Chris Christoff

They paid $45,000 for the house, which had been flooded in 1974 and hid a treasure beneath its stained floor coverings – 15-centimetre pine floorboards.

The handy couple polished the boards, re-installed the skirting boards, French windows, architraves and picture rails, restored 3.3-metre-high pressed metal ceilings, renovated the bathroom, painted the inside and re-roofed.

Nine years later they sold for $127,000 and poured “our nice little profit” into the property they bought for $150,000 the same year; their three-bedroom family home in Mudgeeraba in the Gold Coast hinterland.

About 10 years’ old at the time, the couple describe their home as “the worst house on the best street”. Set on a 5134-square-metre block with sweeping bushland views, they always knew its dated style represented untapped riches.

Property purchased (1993)$150,000
Property value before renovation:$400,000
Property value after renovation:$510,000
Renovation cost$34,700
Equity gain$75,300

“We did make some headway, giving the house a new kitchen with multi-fold windows, installed a new bathroom with a sandstone floor and built a sandstone retaining wall,” Chris says.

“But it was all moving in fits and starts around my career and raising our children.”

Realising their portfolio was flat-lining, they “started enrolling in any property education opportunity that came our way” and met their investment mentors.

They bought a two-bedroom Queenslander on a 1014-square-metre block in East Ipswich for $340,000 in 2012. The deal came with a development approval for two townhouses.

Last year Chris and Karen started looking for builders with plans to develop with a construction loan secured by Chris’s salaried job, strata title the townhouses and the house, and sell one townhouse and the house.

“We had also become interested in buying in the US, planning to use equity from our Mudgeeraba house, so last year we had our house valued,” Karen says.

Floor levelling$2,400
Builder and electrician$10,300
Hardware supplies$2,300

“But because of its half-completed renovation and the clutter – we had been using the rumpus room as a workshop – the value came in much lower than expected, only $400,000.

“This was the first shock. Then came the second shock. Just before Christmas, Chris was made redundant.”

The stunned couple consulted their advisers and quickly mapped out a new plan of attack.

Needing to boost their home’s value to borrow against it, they decided to quickly complete their home’s renovation and, hopefully, grow a lump sum of equity.

“We worked out a new strategy: use our existing line of credit to renovate the house, have it revalued, extend the line of credit and then use this funding for other investments,” Chris says.

“Our renovation timeframe was ambitious but our home had been a worksite for many years and we were tired of living like this.

Bedroom before

Bedroom before

Bedroom after

Bedroom after

“So we started last November with the clear goal that we wanted the renovation done and the house revalued before our guests arrived at Christmas four weeks later; it felt like now or never.”

The pair engaged a renovation consultant who helped them manage their jobs-to-do list.

They told all quoting tradespeople they needed to start the work pronto and with quotes in hand and costs negotiated, an A-team of tradespeople was selected and strict start and end dates were agreed.

New doors, architraves and skirting boards were fitted in all rooms, down pipes and stormwater pipes were installed, and water and termite-damaged plasterboard was replaced.

The roof and interior and exterior were painted and bamboo flooring was laid.

The kitchen has a new European laundry with new tiles, cupboards, a bench, sink and dryer. The laundry doors were two-pack finished to match the kitchen doors. The hallway got fresh cupboards, a sensor and light fittings.

The bedrooms, lounge and dining rooms were painted and new lights and ceiling fans were installed. Chris and Karen’s retaining wall got new stairs and fluoro lights in the long-suffering rumpus room were replaced.

Karen and Chris finally removed all clutter and excess furniture and Karen says she relished staging the house.

“Chris has collected all these decorative giraffes over the years that had sat in storage but finally got to see the light of day,” Karen says.

Kitchen after

Kitchen after

“We did what work we could ourselves including filling several skips, replacing rusting downpipes, cleaning up the roof ready for painting, laundry tiling, runs to suppliers for hardware, scheduling and negotiating with the tradespeople to help them avoid tripping over each other.”

The renovation cost almost $35,000, $5000 over the couple’s budget, mostly because it was discovered the house’s concrete slab was too uneven to lay bamboo flooring in some rooms and needed repairing.

But to their delight the new valuation came back at $510,000; a home value rise of $110,000. Chris and Karen’s fast renovation – 20 years in the making – boosted the accessible equity in their home to an impressive $170,000.

When landscaping, and revamping one final bedroom and the second bathroom are completed during 2014, the couple expect to gain a further $90,000 equity.

In the short-term, their plans include finding a way to fund the Ipswich townhouse construction and a job for Chris.

“Long-term we plan to own enough property to earn a comfortable living and continue to reinvest and develop. We learned a lot on this journey and would say the biggest lesson, and I know it sounds clichéd, is to set a goal, believe strongly, push hard and never lose sight of the end point,” Chris says.

Karen puts it this way: “Just because you only have a little bit (of money) it’s surprising how much you can get done. The trick is in knowing what you want to do then finding out how to get it done.”

About Caroline James

Caroline James works as a freelance writer for API, the Herald Sun, national women's titles and travel magazines.