The Block is a warning for renovators
It seems to be easy money, buy an old place, renovate and make a fortune but the reality is the Block is a warning for renovators. Most, if not all of the many series of The Block have actually made huge losses but the average viewer is left with the feeling that renovation is a great way to make money!
The worry is these shows give a totally unrealistic expectation to budding renovators.
Washington Brown, Lime’s preferred supplier of depreciation schedules (www.washingtonbrown.com.au) has recently run some numbers on the supposedly successful sales in the recent Port Melbourne series and the numbers do not add up!
(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.
The following is from The Washington Brown Report:-
“ From a financial point of view the development, which consisted of transforming a 1920s art deco building into a luxury apartment block, was one of the worst he has ever seen.
While I understand the magic of television, Channel 9 has outdone David Copperfield in creating the illusion of a profit to the public!
Let’s look at the numbers:
According to reports Channel 9 bought the site for around $5 million, which allowed for 6 apartments. Only 5 were sold on TV and for calculation purposes let’s say the acquisition costs is $4.2 million.
The construction cost and depreciation allowances totalled over $11 million, for the 5 apartments alone.
That’s $15.2 million alone in construction and acquisition costs.
It’s worth noting that under the Income Tax Assessment Act 1997 the initial vendor (ie. the developer) has an obligation to pass on the actual costs of construction to the purchaser, where the costs are known.
Let’s not forget there’s then a variety of other costs involved in buying and selling, and undertaking a property development, including:
- Stamp duty
- GST on the sale
- Demolition
- Marketing
- Agents’ fees
- Legal fees
- Interest
- Rates
Whilst some of these costs may have been avoided due to contra deals, the bulk would have to be outlaid by Channel 9.
I estimate these additional costs to conservatively be $2 million, which brings the total cost to $17.2 million.
The Block’s total sales realised just a little over $12 million, leaving the development in the red by around $5 million, yet it has been indicated that profits of up to $715,000 were made by the contestants.”
Just Google “How much did the block cost channel 9” , probably best to go to page two of your results and read some of these articles. It is unlikely that any of The Block series has actually made money and the The Block is a warning for renovators, not an endorsement to make money!
If you want to know more about the pitfalls of renovation and how to make money from property without the work and hassle contact: info@limepropertysolutions.com.au.
