Renovation tips for maximizing rental potential
Renovation tips for maximizing rental potential
Ever wondered why some rental properties sizzle and others fizzle? Here are some tips that help you get the best rent while pumping up the value of your property.
Having a rental property at a time when the market is running low on available lots is every landlord's dream. However, don't let the numbers fool you into complacency. Low vacancy rates do not automatically translate to higher rental income if your property is not up to market standard.
"An owner needs to maintain the property in a proper manner. We see it too often that owners let property deteriorate and don't spend or have budget for an ongoing maintenance program. Not only does your asset depreciate, but you're not getting the best return in terms of the rent," says Graham Joyce, deputy president, Real Estate Institute of Australia (REIA).
According to Peter Bromley, L.J. Hooker Financial Services general manager, getting the maximum rental value depends on several key factors: transportation, location, price and presentation. "Tenants are looking for units that are close to public transport, security in terms of the kind of neighborhood they're in, the rental price and how well the property is maintained," he says.
If your property is not near a public transport link or in the best neighborhood, don't loose heart, there are plenty of ways for you to enhance rental returns.
1. Present it like a pro With the market for rentals being so tight, potential tenants are quick to make decisions. Having a well-presented unit will give you the greatest opportunity to attract the best tenants and snap them up without delay. Scrimping and saving on costs is not the best way to go. Instead, consider installing quality bathroom and kitchen fixtures.
2. Have the property professionally cleaned Kathie Comb, businesswoman and rental property owner advises to always keep lawns mown and the outdoor area tidy for any inspections. "Make sure that you have a clean and freshly painted property. Prior to letting, have the place professionally cleaned including carpets and windows. An attractive property helps to attract a good tenant who will look after it," she says.
3 Use neutral and soft furnishings It is a good idea to avoid highly personalised furnishing and colour schemes in order to appeal to a broader range of tenants. "The home needs to be fairly neutral. It's no good if your colour scheme is personal, because it might not appeal to many people out there in the rental market. Most people just want to move in and get on with their lives," says David Colman, state manager, NSW for Century 21.
4 Use quality carpets and curtains Stay away from cheap vertical blinds that blow and break when the windows are open. While they are cheap to install they don't help with the presentation of the property and need to be replaced sooner. Likewise, reconsider the type of carpets or flooring you will be installing. It should be tough enough to handle a lot of wear and tear, but still presentable. Some of the more modern office carpets are worth consideration.
5 Make sure things work It's no good having a beautifully presented dwelling if a tap doesn't work. Ensure that all the basic facilities such as hot water system and plumbing are functioning well. Check that all doors and windows are properly maintained and have secure locks. Ovens, kitchen elements and refrigerators should also be fully functional and well cleaned. Consider getting these checked and serviced on a regular basis. By ensuring that your property is in good condition through regular maintenance, you avoid costly repairs further down the track.
6 Throw in some extras Most tenants come with their own appliances and nick-knacks. However, some extra amenities -such as a dishwasher and air conditioning -can be a deciding factor for a lot of tenants. Unfortunately, any facility or amenity you put in is your responsibility to maintain or repair. This means that if they break, the cost will come out of your wallet.
7. Install built-in cupboards and wardrobe cabinets Cupboards are painful to move, and hard to live without, so people tend to rent places with lots of built-in storage.
8. Provide a separate internal laundry facility if possible You don't need to supply the machine, but if the laundry area is internal and separate, it could be a huge benefit. "It's one of those things that you yourself will consider an essential feature. My advice is, if there's room, shove it in," says Colman.
9. Car parking is a big plus, especially in city dwellings Providing an off-street covered and lock up garage will enhance your property value considerably.
10. Keep gardens simple Gardens may help boost your rental value in theory. However, according to rental property owner Howard Cutler, gardens are quite difficult to justify. "We try to keep our gardens fairly basic. It's unfair to have all these plants and expect your tenant to take care of them. I just think you have to be realistic how much gardening you can do, especially with the issue of water rationing as well. As long as the front lawn is reasonably well maintained and mowed, that's as good as you can reasonably expect," he says.
11 Set realistic expectations Trying to get the highest rent may not necessarily result in a better rental return if you cannot keep reliable tenants. It's crucial that you don't price yourself out of the market by embarking on a very expensive renovation.
12. Go for long-term tenants. The benefits of establishing long-term tenants include: less need to redecorate and renovate between leases; long-term tenants tend to take care of the property for themselves; less vacant time means more returns in the long run; and finally it's just easier and less stressful to manage. Therefore, be prepared to be flexible to keep a good long-term tenant.
13. Depreciation-Is My Property Eligible? Regardless of age, ALL INVESTMENT PROPERTIES are eligible and contain depreciable plant that should be re-valued and given a new effective life from the date of settlement. In addition, a capital works allowance on the building is available for any investment property with a construction start date after 1985. We can do your tax depreciation schedule (ATO Compliant).
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