5 Easy Ways to Add Value to an Investment Property
Let us for this exercise look at a typical investment type property being a 1960’s built 2 bedroom 1 bathroom apartment within a two storey block of 10 similar apartments with one car space on title located within a 10 kilometre radius of the Melbourne CBD.
The value of purchase is between $300,000 & $400,000 which is very similar to the types of current properties being purchased for our clients. With this type of investment property, our current rental return is approximately $300 to $350 per week.
Adding value to an investment property usually is done in a most visual way for instance, new kitchen versus rewiring both may cost $20,000 to complete however the perceived added value can be seen in the kitchen and not in the rewiring which is hidden behind plaster – out of sight, out of mind.
Finding a great tenant is a fantastic way to add value especially if they love to live in the particular property and have some pride in doing so. This can relate to minimal vacancy times (not costing the landlord and also saving us the re-letting fees).
So what are the five easy ways to add value to an Investment Property?
- The absolutes in these types of properties are repainting the walls and ceilings. They can often be a little tired and do with a fresh coat of paint with neutral tones attract the most likes without offending potential tenants.
- The addition of new floor coverings albeit carpet, new tiles, floating timber floors, polishing older original timber floors, or a slightly more expensive recent idea of polishing concrete all add another dimension to refreshing an existing property.
- A very cost effective addition can be the installation of a dishwasher. They range in price from approximately $500 to $1,000 or more for higher grade models and most tenants would certainly appreciate this new time saving device in their rented premises. You may also be able to slightly increase the rent by $5 or $10 per week which means you will have covered the cost after 2 years given the average dishwasher has a 10 year lifespan. In addition to this, you can claim the initial purchase and installation cost and then, the ongoing depreciation costs.
- Security can be an issue for some tenants and this could be as simple as the installation of deadlocks, an alarm/security system, fly screens or roller shutters.
- Our all time favorite is the bathroom tile resurfacing/enamel painting which works exceptionally well in older 1950/60’s type bathrooms (you know the ones with the pink or blue coloured baths and sinks). This is another cost effective way for the price of between approximately $300 to $800 (depending on the amount of work). You can effectively renovate a bathroom for very little cost and next to no down time at all since these works are usually completed within 24 to 48 hours instead of days or weeks like some bathroom renovations.
PS: One last little secret to lift the look of an older style kitchen is to replace the bench tops with new laminate, have the cupboard doors repainted or just spend $100 on new more modern style door handles.