New IP, to renovate or not?

Hi all,

In a bit of a dilemma here.

I have just bought a weatherboard home which has an expired permit to build a 3 bedroom + study townhouse at the back.

My plans for this property are:

1 - renovate the front house
2 - get the permit for the townhouse re-activated and build ASAP.


My current issue is that I'm undecided on whether I renovate the front house now, and rent out immediately afterwards, or rent out as is (sunken floor, basically no kitchen, old paint, etc).

I estimate that the renovations I was planning on would cost around 10k. This would include:

- restumping the house (quoted 5-6k).
- painting the interior
- minor paint on outside
- installing a decent 2nd hand kitchen (1k).
- new vanity unit and touch up of bathroom (1k).
- minor landscaping
- other touch ups here and there.
- new front door and entry point to house, etc


I'm hoping that by doing the mini renovation, that it will:

1 - bring me an extra $30 per week rent
2 - bring me a better tennant (hoping for it)
3 - give me tennant stability that I can concentrate on the building plans
4 - re-evaluate the house and hopefully get that 10K or so back in equity.

Some mates are saying: just leave it as is, rent out cheaper and when you do the back in a year or so, renovate the front then, etc.


What are your thoughts? Thanks in advance.
 
Hey Dublin,
Have you considered only doing a cosmetic renovation?
Reason I say this is because the re-stumping IMO is not going to bring you any additional rent. This is a structural change and unless your floor has caved in most tenants are not really going to care. If you were selling then that is a different story.

The stumping is also the most expensive and time consuming so you could realistically do your Reno now for half the amount in half the time and stil get the additional $30 because most tenants are only going to care about the nice new paint and kitchen as opposed to if a can rolls on the sloping floor.

There are some tax considerations that I am not educated enough to speak off in detail but just thinking that if the place was tenated and THEN you got it stumped you could claim this. Obviously there is the tenat
Now to consider but I'm sure you could work something out for a win/win situation.
 
Hey Dublin,
Have you considered only doing a cosmetic renovation?
Reason I say this is because the re-stumping IMO is not going to bring you any additional rent. This is a structural change and unless your floor has caved in most tenants are not really going to care. If you were selling then that is a different story.

The stumping is also the most expensive and time consuming so you could realistically do your Reno now for half the amount in half the time and stil get the additional $30 because most tenants are only going to care about the nice new paint and kitchen as opposed to if a can rolls on the sloping floor.

There are some tax considerations that I am not educated enough to speak off in detail but just thinking that if the place was tenated and THEN you got it stumped you could claim this. Obviously there is the tenat
Now to consider but I'm sure you could work something out for a win/win situation.

Thanks for that. Yes I'm not uber keen about the restumping, but its something noticed immediately once you put your foot in the door. The floor is concaved quite a bit and wavy. I'll call an agent and ask.
 
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