Ideas on how to increase my rent? Bondi Junction.

[streetie]

Hello all,

To give you a quick run down on myself, Im 26 from Sydney and I bought my first property this year in April.
The idea originally was for it to be my PPOR, to live in it permanently so I could stop paying rent to people which was paying their mortgages off.
Not having friends or family in the property investing world I thought that this was the best way of doing things.
But after lots of reading in magazines, this forum and a few seminars and a very big interest in property investing myself. I now know this is an outdated old school way of thinking.

Here is a link to the apartment I bought. Its a 1 bedder , 1 bath ,1 carspace in Bondi Junction:

http://www.realestate.com.au/property-apartment-nsw-bondi+junction-107232009

I bought it for 399k. It is tennanted till this November when I bought it at $400 p/w.
I had a deposit of 120k and have a mortgage of $279k P&I. Which is now down to 272k. I also have 15k in an offset account.

So my new plan now is to move in, in November for the 6 months required for FHOG. Whilst im in there I will renovate it. Im an Electrician by trade so will be doing pretty much all the work myself, I also have other tradie mates to help me.
my thoughts for the renovation are:

*Get rid of all the wall paper and re paint the whole apartment.
*New carpet.
*Put downlights through the house and any other power where required (I am on top floor so have access to the roof)
*New bathroom, rip out the bath tub and put in a shower cubicle, which will give me room to plumb in a laundry as at the moment it only has communal laundry downstairs.
*Knock down the wall between the front door and kitchen, creating more of an open living (if its not load bearing)
*Leave the kitchen as it is not too bad, just tidy it up.

Any other suggestions to help maximise my rent?, or faults on my ideas?
Are these things going to be tax dedcutible if I am living in it?

Was also wondering if it would be worth fully furnishing and putting 2 single beds in the bedroom and renting to some asian students or travellers for upto $550 p/w?? ( I have read on this forum that it can be more trouble than its worth fully furnishing)

Also should I change my loan to IO now or wait until I have moved out?
And finally do you think this place will be a good investment as when I bought it, i was not thinking about it for investing but for me to live in.

Thanks for any ideas/suggestions peoples

 

[streetie]

I forgot to add. That my new plan is to obviously move out after I have lived in there for 6 months for the FHOG. And it will be an IP permanently after that. Or atleast for a few years anyway.

 

[Aaron_C]

I think you'll be overcapitalising with all those renovations...especially the bathroom. Have you considered replacing the dishwasher with a laundry machine instead? As for downlights since you can do it for cheap because you're a tradie, then that will be a good idea - as is removing the wall next to the kitchen.

Is there demand from students in that area? I think you're better off leaving it unfurnished for now, but offering furnishing IF the tenants want it (and are willing to pay higher rent).

 

[silverx]

Hello all,

To give you a quick run down on myself, Im 26 from Sydney and I bought my first property this year in April.
The idea originally was for it to be my PPOR, to live in it permanently so I could stop paying rent to people which was paying their mortgages off.
Not having friends or family in the property investing world I thought that this was the best way of doing things.
But after lots of reading in magazines, this forum and a few seminars and a very big interest in property investing myself. I now know this is an outdated old school way of thinking.

Here is a link to the apartment I bought. Its a 1 bedder , 1 bath ,1 carspace in Bondi Junction:

http://www.realestate.com.au/property-apartment-nsw-bondi+junction-107232009

I bought it for 399k. It is tennanted till this November when I bought it at $400 p/w.
I had a deposit of 120k and have a mortgage of $279k P&I. Which is now down to 272k. I also have 15k in an offset account.

So my new plan now is to move in, in November for the 6 months required for FHOG. Whilst im in there I will renovate it. Im an Electrician by trade so will be doing pretty much all the work myself, I also have other tradie mates to help me.
my thoughts for the renovation are:

*Get rid of all the wall paper and re paint the whole apartment.
*New carpet.
*Put downlights through the house and any other power where required (I am on top floor so have access to the roof)
*New bathroom, rip out the bath tub and put in a shower cubicle, which will give me room to plumb in a laundry as at the moment it only has communal laundry downstairs.
*Knock down the wall between the front door and kitchen, creating more of an open living (if its not load bearing)
*Leave the kitchen as it is not too bad, just tidy it up.

Any other suggestions to help maximise my rent?, or faults on my ideas?
Are these things going to be tax dedcutible if I am living in it?

Was also wondering if it would be worth fully furnishing and putting 2 single beds in the bedroom and renting to some asian students or travellers for upto $550 p/w?? ( I have read on this forum that it can be more trouble than its worth fully furnishing)

Also should I change my loan to IO now or wait until I have moved out?
And finally do you think this place will be a good investment as when I bought it, i was not thinking about it for investing but for me to live in.

Thanks for any ideas/suggestions peoples

i would offer the increase with additional of items that can be put in which can be paid off in 3-5 years

for example an aircond, which cost 1.5 to install, increase it by 10 per week, roughly getting it back in 3 years time

always put in something that can attract the value to the people in terms of usability. try to avoid doing things which are aesthetic in value like feature wall, new painting (unless if it's really really dirty and old), downlights etc

dishwasher, air cond, fresh kitchen and bathroom those were the winner in the rental market

 

[streetie]

cheera for the quick replys.

Aaron c: I know it is alot of renovating, but like I said i would be doing most of it myself after work and on wk/ends and I enjoy doing it, so I think I could do all i mentioned for between 5 to 7k.
yeah there is quite a demand of foreign students in the junction, backpackers and expats. crazy rents in the summer time, ive seen adds on gumtree where people put 2 to 3 single beds in there spare rooms and charge it out for $250 a bed, and in the winter months those prices drop down to about $150 a bed.

Silverx: I dont think it would need A/C as its on the 3rd level and its quite airy and breezy. I do like your idea of a dishwasher tho. Might try and get one cheap on ebay or factory seconds.

cheers

 

[Bigtone]

switch to i/only now.

 

[silverx]

switch to i/only now.

and fix it to lower rate, that's equivalent to at least 20 dollars in rent increase, plus you dont have to pay 7.5% of that increase to PM

 

[streetie]

is it just a matter of a phone call to the bank and some paperwork? or does the whole loan have to be refinanced?

 

[silverx]

is it just a matter of a phone call to the bank and some paperwork? or does the whole loan have to be refinanced?

a phone call away and a fee (around 200 dollar)

 

[streetie]

thanks: bigtone, sliver x.

 

[Propertunity]

*Get rid of all the wall paper and re paint the whole apartment.

OK if it needs it.

*New carpet.

OK if it needs it.

*Put downlights through the house and any other power where required (I am on top floor so have access to the roof)

OK - but not really a value-add. This is more along the lines of your own individual leanings because you're a sparky.

*New bathroom, rip out the bath tub and put in a shower cubicle, which will give me room to plumb in a laundry as at the moment it only has communal laundry downstairs.

Having an internal laundry is a real value-add.

*Knock down the wall between the front door and kitchen, creating more of an open living (if its not load bearing)

You're going to need BC approval + a by-law. It can happen but it is a long process and you'll need an engineer to sign off on it too.

*Leave the kitchen as it is not too bad, just tidy it up.

Agreed.

Are these things going to be tax dedcutible if I am living in it?

Not while you're living in it, no. But when you move out and make it an IP then it will come under a depreciation schedule.

Was also wondering if it would be worth fully furnishing and putting 2 single beds in the bedroom and renting to some asian students or travellers for upto $550 p/w?? ( I have read on this forum that it can be more trouble than its worth fully furnishing)

You'll need to ask a couple of PMs in the area to see if there is demand for this and what can be charged for furnished Vs unfurnished.

Also should I change my loan to IO now or wait until I have moved out?

Your choice, but I'd always do IO whether its a PPOR or an IP.

 

[Belbo]

Your choice, but I'd always do IO whether its a PPOR or an IP.

Excuse me, Prop. You'd put your PPOR on an I/O loan too? Isn't that opposite to the idea of reducing your non-deductible debt asap?

 

[Melbournian]

i do that too I/O on a PPOR coz i manage it better having all the funds in offset. Also assuming you sell your PPOR and you had let it out before you moved in, it doesn't help with CGT

 

[Propertunity]

Excuse me, Prop. You'd put your PPOR on an I/O loan too? Isn't that opposite to the idea of reducing your non-deductible debt asap?

Yes, shocking I know but I have my reasons:
1. PPOR became an IP and present PPOR will too - so no reason to reduce loan.
2. I am still in the "accumulation phase" and it preserves cash for that purpose.

 

[Belbo]

Yes, shocking I know but I have my reasons:
1. PPOR became an IP and present PPOR will too - so no reason to reduce loan.
2. I am still in the "accumulation phase" and it preserves cash for that purpose.

Actually, I'm doing the same thing. Just checking to see that I wasn't crazy.

 

[Propertunity]

Just checking to see that I wasn't crazy.

The other possibility of course is that we're both crazy

 

[Mick C]

Space is very important in Bondi, so getting the down lights would help to create a sense of space + since your in that trade it won't be to expensive.

I wouldn't rent out the place to students, as the rent you would get from professional workers and couple, since bondi attract a lot of young professionals

1. Higher rent
2. Will take care of the place a bit better
3. Longer term tenants compared to students

As Arron mentioned, advertise it as both furnished and unfurnished.

The kitchen looks fine, the bathroom might need a bit of renos + change of curtains...the place doesn't look to worn down.

Regarding the laundry, chuck it in the kitchen ( replace the dish washer).

Also if your going to re-carpet...consider polish floor boards instead.

Regards
Michael

 

[Jamie M]

The unit might be too small but allowing a small pet (cat or dog) can result in a higher rent.

Cheers

Jamie

 

[streetie]

Mick C:
yes I think your suggestion of just aiming at young profesionals would get me high rent and less worries than with students.
I dont think that there is a dishwasher in the kitchen ATM, but Im sure i could figure out some re-arrangement of the cupboards if I do pursue that idea.
With the floorboards, it will be cement slab under the carpet as it around 1960's building. Would you still bother on getting floorboards installed?, it would be quite alot more expensive than carpet wouldnt it, but maybe this would attract a higher class of tennant?? but it could get trashed a lot easier by bad tennants.
Any ideas on how much $$$ floor boards would cost for 43 sq m unit.

jamie M: the complex doesnt allow dogs, would have to check about cats.

Thanks for the ideas.

 

[Mick C]

If strata don't allow dogs, they won't allow cats -- only small pets like fish etc are allowed ( fish arn't much of a pet i have to say )

Regarding re-flooring, carpets would be JUST as easy to get trashed as timber flooring ( as long a it's not floating floor boards, which soaks up water like crazy!) yes it be more expensive but the look and durability would be much better then carpets i would say.

It be around $40-65 per sq meters ( lay and polish) depending on which material you want ( yellow tongue, blue tongue? pine...)

Regards
Michael