A rapidly moving market, in terms of capital growth, allows investors some freedom in terms of property improvements.
It is during these times that they can focus on refinancing to take advantage of increasing property values.
However, a less robust market — such as the one we are experiencing now — means that to remain competitive in the market, there is an increased need for investors to ensure their property is presented well and offers the features that have become important to the modern-day lifestyle.
I speak of the three Rs of value-add, including renovation:
Repairing an investment property yields no return on investment, but simply ensures the property is safe and operational.
Any repair work should be renegotiated into the rental price.
If you already own the property, the work needs to be completed asap to avoid litigation or further damage.
Property owners should always consider maintenance, and budget for it in advance.
Property owners may opt to cosmetically improve their property to make it relevant.
Refurbishment often includes: laying carpet, installing blinds and painting the interior and/or exterior of the property.
To generate equity and improve before- and after-tax cashflows, investors can overhaul the main feature rooms (kitchen and bathroom) and the entire property for a more modern look.
Renovating should be an important consideration for investors to maintain relevance in the rental marketplace, where the number of tenants and dwellings ebb and flow with the condition of your property; crucial to your vacancy rates and rental return.
Well-presented properties are proven to attract quality tenants who are houseproud and more likely to stay.
The opposite is also true for poorly presented properties.
Did you know…
If you are using a registered builder, you can borrow for the project.
The banks will lend up to 80% of the project cost.
With the cost of money being so low, there is a potential opportunity to borrow the money and have the increased rental yield pay for it, while adding value and improving the property’s appearance for potential tenants or even buyers.
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