It’s easy to know the right way, after doing it the wrong way, says renovations coach Ilse Wolfe.

“While hindsight is a great thing, you can’t benefit from it until later,” she says. “But you can share your mistakes for the benefit of others, especially when the market conditions leave little room for error.”

Wolfe is the director of Opes Accelerate, a coaching service for investors of the Buy, Renovate, Rent, Refinance, Repeat (BRRRR) strategy.

Cashflow Hacking is her six-step twist on this strategy, for the biggest impact on the rent and value of the property, all of which were born through her own (sometimes painfully-learned) experience.

“There are a lot of things I would tell my younger self,” Wolfe says.

Here are her top five tips for avoiding the same mistakes.

NOT ADDING A BEDROOM

The best way to increase chargeable rent, and increase property value, is to add an extra bedroom.

“It basically means you’ve bought at discount and is why its number one on the Six Cashflow Hack steps,” Wolfe says.

It’s important to know a cosmetic renovation (painting and carpeting) will cost you almost the same as a renovation that includes adding a bedroom, when done right.

“This is why in the early days I would spend $100,000 without even adding a bedroom,” she says. “But I wouldn’t get the same returns, so I was overspending.”

It’s not enough to “just” set a budget, you need to “set” how you want your property to perform when finished, then see if the cost and return are worth it.

“In the end it comes down to planning,” she says. “If you don’t know what you’re aiming for, you’ll just land somewhere.”

CREATIVE INTEREST RATES

Sometimes, taking the best interest rate at the time isn’t the best option, Wolfe says.

“Rather than taking the lowest interest rate at 2.19 per cent a couple of years ago, I would have rather locked in the 2.99 per cent for five years,” she says. “This way, I would have secured a (still) low cost of lending for a longer period.”

Many investors may not know that a property’s mortgage doesn’t have to be one fixed mortgage – you can have a whole bunch of different ones.

“Splitting your fixed rate rollovers over a few periods softens the blow, and it’s staggered, rather than doubling – like a lot of investors have learned this year,” Wolfe says.

However, there are always exceptions, depending on the market. For example, right now ANZ’s five-year rate is less than the one and four-year fixed.

“But we know it’s likely that interest rates are coming down shortly, so I wouldn’t want to lock in the higher rate for a longer period of time.”

‘If you don’t know what you’re aiming for, you’ll just land somewhere’

MULTIPLE QUOTES

It’s important to shop around for quotes when it comes to tradesmen. As an example, a recent electrical quote ranged from just $10,000 all the way up to $24,000 between three electricians.

This is why Wolfe says it’s vital to get “at least two”.

Also, what’s a reasonable price for a job in one region will be too expensive in another.

“Right now it’s cheaper to fly a painter from New Plymouth to Whangarei than pay for a hard-to-come- by local painter,” Wolfe says. “So my advice is to get a few, and weigh them against each other.”

But be wary of the cheapest quote because it might get you a not-so-good job.

“Don’t obsess over the dollars and put them in the context of what you want.”

TRUST YOUR GUT

Wolfe says if you’re getting “bad vibes” off someone you’re working with trust your gut.

“The cost of your renovation sits with you,” she says. “It’s better to swap someone out than constantly having to accommodate someone coming to site late, not answering calls, or putting your other tradesmen behind.

“I’ve made the mistake of not swapping someone out, and I ended up bending over backwards more than I should have.”

LEARN FROM EXPERIENCE

Finally, Wolfe says the biggest mistake she made is not working with others when she was just starting out.

“If I had teamed up with someone else I would have been able to work with 10 years’ worth of insight – instead of just my one year,” she says.

“Property investment is all about leverage, and I would have leveraged people better – their knowledge and their experience.”