Does this make financial sense?

[jacked]

Hey somersofters looking for some opinions really...

Due to personal circumstances its time to move on, I have one of my IPS in a location where i would love to live curently tenated for 17,000pa, But always planned on buying another property to be my PPOR which would suit my lifestyle in regards to wants/needs/space ect. I have been thinking about the possibilty of when the lease runs out in the IP moving in spending around $25,000 on a renovation to make it more comfortable live here for the next few years allowing me and my partner to save more money and purchase the PPOR we always wanted without having a large amount of debt over our shoulders and makeing the property that was revonated a rental once again (I would also assume if the renovation gets done when it becomes a rental again I would be able to get a better deprectiation on this property) After a renovation I would presume I could get around $30 per week more once leased again.

Does this sound like a good or bad idea? Do you think its worth outlaying that sort of money on a renovation to move into (I wouldnet move into it without doing a renovation) Or just keeping it the way it is as a rental and take the plunge buying the PPOR..

Regards.

 

[Peter_Tersteeg]

$30 per week isn't a very good return for a $25k renovation, but this can be very much dependent on the property. In many instances a coat of paint, some carpeting blinds and better lighting can achieve the same rental result for a lot less than $10k.

Nothing wrong with your overall plan, but be careful you don't over capitalise.

 

[jacked]

Thanks for your feedback Peter, and a great point about not over capitalising.

I completely agree with you that a 25k renovation to increase the rent by that much is not great purely because most of the renovation comes down to me being fussy and the market wouldn't really pay for some of this things I would intend on changing if I was to move there.

I guess I am just thinking out loud on this topic if this seems like a logical plan or sounds a bit silly...

 

[Peter_Tersteeg]

Not really silly. I'm pretty sure I'll spend way more than prudent on the house we're planning to build for ourselves over the next year or so. Keep in mind though that this isn't the 'dream house'.