Renovating IP

[jdjd]

Hi there

I just wanted to get some thoughts on how to decide when it's worth investing in an IP to bring up to date?

One of mine has recently become vacant and I'm wondering if it's worth updating the kitchen and bathroom (in addition to giving a paint job etc).

I can rent it out as is and probably command a slight increase in rent compared to what it was previously rented for but I am wondering whether it's worth throwing a small amount of $$ in and asking for more rent.

Thanks!

 

[Tim86]

It depends on how much the reno will cost you. How much extra rent you can get. Whether you are wanting to create further equity in the property to then re val and access for another purchase. Also need to consider if you find it difficult to rent out the un-renovated property, and if a reno will make it easier to rent.

For me I reno straight up because I want to create the equity to re val and borrow to use for the next project. Plus it makes the place nice so I get tenants easier. And I can do the reno's myself so it doesn't cost a lot of $$$

 

[Connolly]

When we stack the numbers on our Reno projects. I want $1 back for every dollar spent which usually means I have to buy well and below market value.
So if I spend $25k on Reno I expect it to value in $50k above.
Same as Tim, in that I then pull funds to jump into the next project.
I also get a depreciation schedule done post Reno.
It's win win as I can command a higher rental amount, I attract a better calibre tenant as the place is new, neat, clean (well except in our last one, they didn't pay rent at all) and I can move quickly into another project.

The key is to establish what the back end goal is and let that dictate-