How landlords can renovate for better returns.
Many Australians see property investment as an express ticket to wealth and financial security, without taking into account the expenses they must incur along the way.
As a property manager, it can be frustrating to be asked to find a tenant who will pay a premium, only to realise a home or apartment is in dire need of work. If you find yourself in this situation, it may be time for a talk with the the landlord about how to optimise the property.
Spelling out the benefits of upgrading an investment property can benefit you, the tenants and the property’s owner.
Why upgrade an investment property
The nicer a property, the more you can charge for it. As a property manager, having higher priced properties on your books adds to your management fee income as well as the overall value of your rent roll.
For the owner / landlord, it is important to spend money in order to make money. By keeping up with renovations and repairs, they will be able to receive more rental income. They will also save themselves the trouble of having to do a major renovation when things get so damaged or out of date that nobody will set foot inside the property.
From a tenant’s perspective, the more features a home has and the more modern it is, the more they are likely to stay for the long term. This gives them security of tenure and brings a stable income for the property’s owner.
While the rules do vary, some repairs and improvements may be tax deductible. Help your property owners out by having information ready about what they can and can’t claim to help them decide what to spend their money on.
What to upgrade
When helping your client decide what capital improvements to make, keep the ideal tenant in mind. Think about their lifestyle and what they want from the property they live in.
For example, a family with older children may appreciate security locks which can be opened with a code instead of a key. Young professionals may be impressed by a contemporary colour scheme and modern shade solutions such as plantation shutters or remote controlled blinds.
Across the board, any features reducing the cost of living will be valued by prospective tenants.
This includes:
Eco friendly lighting
Intelligent air conditioning systems
Solar power
Energy efficient washing machines and dishwashers
From everyone’s perspective, easy to clean surfaces are a bonus in a rental property. Your landlord may wish to consider replacing wall to wall carpeting with flooring which won’t be susceptible to stains. In the kitchen, benchtops made of durable materials will be less of a headache for tenants to keep in good condition - and won’t need replacing.
Another factor to consider is an up to date internet connection. If the property is in an area where fast broadband is available, look into an upgrade and make sure the tenant realises this is one of the features of their new home.
Elsewhere around the property your landlord could look into creating a low maintenance but attractive garden, adding storage solutions such as built in wardrobes or having skylights put in to allow for extra natural light.
These kinds of upgrades don’t cost a lot but can easily pay off in the long term by increasing the value of the rental property and the length of the tenants’ stay.
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