Image Property,
Head Office at Image Property.
Top 6 benefits of renovating your property
Did you know you can borrow 80% of renovation costs if you use a licensed builder?
If you are contemplating renovating your investment property, here are 6 benefits to consider.
1. Widen your asset base
Renovations can add value to your property – for each dollar spent, you can bank on 50c to a $1 back. This is manufactured equity and one of the stand out benefits of property as an asset class. Your destiny is truly in your hands.
2. Claim depreciation on the renovation cost
Being incentivised to restore your property back to a fresh or near new state will help to improve your cashflow in the long run. This effect will happen over seven years, with a lot of that outlaid money returned in the first year.
A client of ours spent $70k on a renovation and gained $100 in additional rent and $35 a week in depreciation benefits after the new finance cost of $53 per week – meaning their cashflow improved by $82 per week.
3. Less maintenance
The cost of maintenance your investment property drops to zero and, importantly, a trusted builder has done the work which means there will be a warranty for all the new improvements made.
4. Better quality tenants
Your work will not go unnoticed. Better tenants want to live in better homes and have the means to afford it. Conversely, properties that are unloved usually attract tenants that bring problems. A great tenant is half the battle.
5. Less vacancy
Every week that your property sits empty, you lose 2% of your annual returns. If your property seems to be getting longer and longer periods of vacancy, then it may be that it is becoming less relevant in today’s market.
6. Stand out in a high supply market
A good property management service should be ably to tell you about supply as well as demand. If you are in high supply market, for example where there have been may apartments built, then renovation helps to level the playing field. Older properties are commonly more generous than some of the modern-day designs and renovation may even put you in front of some of the cramped stock on offer today.
