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An older investment property, while not “bright and shiny” offers a great opportunity for investors to maximise their returns.
If the returns on your investment aren’t what you believe they could be, perhaps a fresh look could help you identify the problem. If you’ve determined that the problem isn’t the market, then take a closer look at your investment property’s condition.
Remember when renovating that “less is more”. Keep a tight eye on your budget but don’t give in to the temptation to go with cheap materials. They’ll just end up costing you more in the long run. Shoot for middle of the road, quality materials which have staying power and above all, when adding value, consider the style and age of the investment property. A top of the line, stainless steel chef’s kitchen would be out of place in an old Victorian.
Power Up Your Yields
In addition to the typical improvements such as paint, carpet, fixtures and landscaping, consider the following features that your tenants will appreciate, and which will definitely improve your investment property’s value – and your yields.
A typical block setup for older properties can often involve one or two entrances to the building with access to each apartment via connecting walkways. Often, these doorways are either not locked, or in some cases the door is completely missing! This can be very worrisome for tenants, especially in those blocks situated within the inner rings of a CBD.
Consider installing a strong door and modern security system for the entire block. It will require approval from the strata – and if the sinking fund doesn’t have enough to cover the costs a special levy may be called for.
Is the unit’s letterbox secure? Identity theft is a real crime, which is growing more every year. An updated and secure letterbox offers peace of mind to tenants at a minimum of cost to unit owners. Of course, such a change would also need approval by the corporate body.
If your investment property is a unit within a block which does not have assigned car park spaces – but it does have extra green space – such as a large area for clotheslines – consider the possibility of modifying the space to assign a parking space for each resident. The existing clotheslines can then be replaced with the more modern option of folding clotheslines that are mounted to the building.
If the unit owners are amenable to the idea of making these changes, a lawyer can create a new strata plan, which designates one car space for each unit. Once this is done, valuers will assess the value of each unit after the changes have been done.
This strategy, like so many others, is dependent upon the specifics of each property and in some cases the costs to improve may be prohibitive. This is where your due diligence will pay off. The rental yield and capital growth, however, should increase in value with the addition of these benefits.
In addition to the changes mentioned above, there are a number of ways you can add value to your investment property without breaking the bank.
The following list is by no means exhaustive, but it does include those changes which will deliver the most “bang for your buck.” Before jumping in and making all of these changes, check with your property manager or an agent familiar with the area. He or she can advise you on what rent and/or property value increases you can expect after renovations are done.
Change the Front Door
Depending upon the condition of the door you can either replace it or even paint over an old wooden door using a bright cheerful colour such as maroon.
The first impression your investment property will deliver to prospective buyers is the exterior. The lawn must be mown, and the gardens in good repair. Repair any broken or cracked pavers and clean or replace any lawn furniture.
Choose quality, inexpensive materials to resurface your kitchen bench. Rather than opt for the cheapest pick, go with durable, middle of the road materials.
Turn a linen cupboard into a laundry and convert the laundry into a second bathroom. It’s a rare investment property that won’t deliver better returns with the addition of a second bathroom.
Does your investment property hold a secret? Peel up the carpet and you may find some lovely floorboards underneath – a feature that is surprisingly common, especially in older properties. Simply polish and stain the floors and you’ve added a luxurious touch that can improve your return.
A bright, colourful feature wall can instantly modernise an older room. Don’t choose dark colours as they tend to shrink the space. Stick with cheerful tones to create a light, airy feeling to the space.
Change a Window into a Door
Rather than worry about sealing up a leaky old window, replace it with a bifold door – a fantastic way to bring the outdoors in, effectively expanding the feel of the room.
Create Extra Rooms
This strategy works especially well in an older investment property as rooms in these properties are typically larger than newer homes. The least expensive way to create an extra room would be to add a wall in an existing room such as a large living room. The extra room can be rented as an additional bedroom or a study.
Stage the Home
Finally, either engage the services of a professional stager, or do it yourself. Rent furniture for the space (if the old furniture won’t do) add some tasteful, but inexpensive artwork and use fresh cut flowers or coffee and cookies to add to the ambiance when open for viewing.
For more tips and strategies designed to help you get the best return possible and grow your investment property portfolio come along to our next complimentary Property Investor Nights. You’ll learn how to pay your home off in six years (or less), how to create a six figure passive cash flow and much, much more. Hope to see you soon.