Do you want to improve your investment yield through renovating?
The decision to renovate your investment property will help you improve your yield and manufacture some form of equity. Not only that, it’ll also help you allure and satisfy tenants which is an edge in minimising prolonged vacancies and loss of rent.
But… you should be careful, a lot of people had fallen into the trap of either spending extravagantly, or, not doing enough to get the best value from their renovations.
Today’s article will be your guide to know what are the things to do (and not to do) to avoid any possible pitfalls.
Facts About Renovation
Property enhancement is a great help to boost your property’s tenant appeal, it’ll also give you more chance of higher rent and add up a long term value to it. But, in doing this idea, there are some crucial financial considerations to talk about.
The first consideration is when you’re planning to renovate your kitchen. Renovating for a new kitchen can only be done if the area is vacant, if not, it’s possible that you’ll encounter loss of rent, which is tragic, right? Reinvestor Wealth expert Adam notes that there is also tax considerations – because if a property is vacant and not available to rent for a significant period of time, it could impact the ability to claim gearing benefits.
You need to consider also that the money spent on any renovation is considered by the tax department as a “capital expense”. This implies that the expense is also usable to lessen the capital gains tax that may incur if the property was claimed at a profit, but in this case, property owners can’t usually claim the cost of any renovation as one of the current expenses like maintenance or repairs.
Issues mentioned may not be a complication on any property owner’s part if the property is earnestly dated or run down. However, if this is not the case, you can try to look at methods to get the highest value from a low-cost renovation.
A good choice for the said method is to build on an undercover car parking. A car is usually a tenant’s most important asset, and if your property is situated in the major city wherein on-street parking is expensive, chances are your tenant will usually grab the chance. A basic car park which will cost about less than $3000 will significantly increase a property’s rental yield.
Another option is by increasing your storage space by supplementing built-in cupboards in every bedroom. You can use any budget-friendly pre-designed product parts you may see in a hardware chain. You can definitely use Bunnings and hire a handyman to install those at your most convenient time. In lieu of, if your property is situated in an area where the extreme temperature is present, installing an air-conditioner will be the best option you can apply to help make the area more liveable.
That’s it for today’s article about improving your investment yield through renovation. The bottom line in this process is that it’ll always about giving hard work. A right amount of patience and the right type of approach you can improve your property for the better.
The major element of achieving a better result is to comprehend the demographics you’re renting for. After all, you’re renovating your property to attract a tenant and not for you.
As with any vital decision though, it’s indeed important to consider the pros and cons that doing a renovation can give, both financially and personally. It’s only when these factors are carefully considered and researched that you should feel comfortable concluding to a decision.
The thing here is to do improvements that’ll appeal to tenants in your area. Speak with a local real estate agent for a vivid idea of what works for your renovation.