We see many investment properties that are not providing the return that they could be, simply because they are in need of improvements. Many investors are aware of this, however, can feel overwhelmed by the costs or the work involved.
Normally we find that the investment with the best return for a Landlord is found by improving their run-down property. The results of these improvements include significantly improved weekly rent, a property that is easier to rent and attract high quality tenants to, and of course ending up with a more saleable asset.
Often spending $10,000 can justify a rental increase of $20 per week (a net return of 10%) and a renovation of around $50,000 for a new kitchen and bathroom in a dated 2 bedroom unit, can usually deliver an increase of $100 in weekly rent which represents a return in excess of 10%.
There are also tax benefits of scrapping old materials and depreciating new fittings and fixtures. If funds are not to hand to embark on a renovation, perhaps taking advantage of the lowest interest rates in Australia could be an option to consider, with the added benefit of interest being tax deductible.
A good agent will report to you on the opportunities they see for improving your investment property to maximise both the ongoing return and the capital return to you. At Rightside we have managed numerous renovations and upgrades to investment properties on behalf of our clients and have established good relationships with various tradespeople who deliver cost effective and timely renovations that result in a higher net return to the investor.