Being a company that provides building maintenance and renovations for Property Investors, we often see the same pattern emerge over and over again. Properties can appear tired, run-down and in some cases, even unsafe. Property Managers can be at their wits end dealing not only with stubborn property owners who pay the bare minimum on upkeep, but also tenants paying the bare minimum in rent who don’t care for the property! It can also be frustrating for professional tradesmen who get asked to simply provide a ‘band-aid’ solution to a problem when they know it is better to spend a bit extra and get the job done properly with a guaranteed result.
If you own an Investment Property and you know it is underperforming, have you considered a strategic renovation? Providing you don’t overcapitalise, Investors, Property Managers, Real Estate Agents and Tenants will all benefit from a renovated property. Let’s discuss the benefits of renovating:
Property Owners: The property’s value will improve. This increase in equity may be leveraged for other projects. If renovating in preparation to sell, a higher price can be achieved. The Owner will enjoy fewer maintenance issues with a newer, freshly updated home in contrast to an older, run-down one. Essentially, a nicer place to call home.
Better Tenants: It’s accepted wisdom that the better the property, the better quality tenant you will attract. Would you rather be selecting from prospective renters who can afford your old, dilapidated house at $350/week or would you rather sort through rental applications of those who want a clean, new, well presented home at $550/week?
Real Estates benefit too: The Estate Agent selling the property will benefit from an increased commission from a more valuable property, not to mention how much easier it will be to attract buyers. If the property is being rented, the Real Estate Agency will take a percentage commission from a higher rent. Estate Agents, take note: if more properties were renovated to a professional level then a higher rent could be commanded.
No out-of-pocket expense: If you are a home owner who already has equity in their home, our Mortgage Broker can assist you in accessing that equity to fund the renovation. In many cases, the increased rent far outweighs the cost of the renovation when broken down to a weekly repayment meaning you are actually MAKING money by spending money!
Don’t forget Depreciation: If you DO renovate your house always engage the services of a qualified Quantity Surveyor. They will ensure you are able to maximise any tax deductions and entitlements. It is also important to speak to your accountant. In some cases, it would be possible to claim the full amount of a restoration, should it meet the specified criteria.
There are so many benefits to renovating your Investment Property. That’s why we’ve developed our Rental Renovation service. Utilizing RP Data, we ensure our clients don’t overspend on their renovation costs, providing a sound result for their investment strategy. It’s a WIN-WIN for all involved. If as a Property Manager, difficulties have arisen in persuading Owners/ Investors to update or even maintain their property, feel free to contact us for advice. We’re more than happy to help.