Adding Value To Your Investment
To get the most out of you car you would have it serviced every 10,000kms spending money on parts and maintenance ensuring it runs smoothly and retains value but when was the last time you serviced your investment property ?
Whilst surprising to many & occasionally back in fashion original 1960′s features unfortunately no longer attract premium rents or premium values, be it a major or minor service updating your property will ensure strong demand from quality tenants and minimise the chance of diminishing future returns.
In general we have found that well maintained and updated properties return around 30% beyond their original counterparts and attract a return on the investment of renovations in a range of 20-30%
A minor make over may include items such as paint, carpet, new knobs & handles, blinds, tap wear, and lights as potential improvements which can be easily updated or replaced with in a specified budget. A mini make over will generally cost in the range of $3000 to $4000 with results of up to $60pw -$80pw extra on an average $550 pw rent. Further more your accountant will be able to advise you of any tax savings through deductions of costs & depreciation of fixtures & fittings.
Major make overs of kitchens and bathrooms whilst more costly can substantially increase returns and with the assistance of an experienced property manager and tradesman should be hassle free.
Properties which are updated on a regular basis will attract premium rentals and quality tenants; with this in mind it makes good sense to allocate a proportion of rental income towards future updates and to ask your property manager what they would suggest could be improved in both the short and longer term.
CASE STUDY
Oxford Street Apartment
Located in the inner city suburb of Darlinghurst the subject apartment featured an original kitchen, bathroom, paint & carpet. Completed in the early 1980′s these fittings & finishes were older than the majority of prospective tenants inspecting the apartment being a market of young professionals working in Sydney CBD. After a quick discussion between the new owner and there appointed property manager, some careful consideration & calculation it was decided that an affordable make over was in order to maximise returns and attract a higher calibre of tenant.
Post renovation the final result was an increase in rental from $515 to $725 per week being a staggering $210 per week increase and an approximate 40% increase in return. The approximate cost of the renovation including new bathroom, kitchen, paint, carpet, lighting, electrical, laundry fittings and balcony tiles was $28,000.
