To Install Air-Con / New Carpet or not?

[S83]

Hi guys,

I'm looking for some advice.

We have a great tenant in our townhouse, but she'll be leaving in May. She's a friend of ours, so she's paying us $340 p/w directly (as opposed to the $360 we were charging when going through an agent - we were only receiving $322 'in the hand' after management fees).

Unfortunately she will be leaving in May, and I'm stressing about the place being vacant.

Since she moved in 2 years ago the property market has BOMBED on the Gold Coast. The townhouse 2 doors down from ours has been advertised at $340 through an agent for about 3-4 months with no luck. If we went through an agent and only charged $340 p/w we'd be just clearing $300 a week. PLUS, even THAT is obviously too high a price, as the other townhouse has been vacant for so long.

I think we need to make the place more attractive to prospective tenants. We have just gotten married so we have no cash and would need to put any costs on a Credit Card or get a loan (we have no equity in the place).

We're trying to decide whether or not we should install split system air-conditioning in the living room and the master bedroom (cost of around $4000), and replace the badly worn carpet (around $1800).

We think we'll paint too (we'll do it ourselves).

What do you think we should do? Leave the place as-is, drop the rent and pray for tenants? Or spend the money?

Any advice is welcome and appreciated

Thank you,

Sarah.

 

[JWR]

S83,

Do you own the place you are living in currently? If so, is it worth more than this IP and would it command more rent?

If these factors are true, consider moving into the IP and renting out your PPOR until the market picks up. Then you can delay the spending of carpets/air con until you have the money.

If that's not the case; its obvious something needs to be done to attract tenants - be it in spending things to add tenant appeal or by dropping the price. I am no expert in this area so will leave it to the others.

 

[S83]

Hi JWR,

No we are currently renting the place we are living in - after living in what is now our investment property for a year, we both received job transfers and needed to move closer to work.

Unfortunately moving back in isn't an option for us at the moment for various reasons.

This is part of the reason that we feel so pressured to get tenants in quickly - our rental income covers our rental expenditure (just).

This whole property investment thing is getting almost too stressful for me...Lol.

 

[gottabespotless]

To answer your first question - YES - in my opinion EVERY property on the Gold Coast should have air-con. I don't know how people live in places without it - the humidity is summer is awful. Reverse cycle air-con is worth every cent and, yes, I do believe it will attract more potential tenants. Painting is a good idea too - will freshen the place and make it more appealing immediately for a relatively small $ outlay and maybe only a weekend (or so) of work.

Just to be nosey - do you have a PPOR? If so, why not rent it out too and you and hubby rent something cheaper and put the extra money into your properties if cash is becoming an issue? Just a thought ...

All the best.


* Sorry! Just read your post. We must have been typing at the same time

 

[Jody in Darwin]

Hi S83,

In some places (such as Darwin and Gold Coast according to gottabespotless) airconditioning is no longer considered a bonus - it is expected along with TV reception and phone lines. To not have airconditioning is to considerably reduce your pool of potential tenants.

Something my business partner and I have found very helpful is doing a detail clean of the property. This can give an old property a 'fresh' feeling. It goes above and beyond the 'reasonable' cleanliness required by law and entails removing ALL grime/dirt in between tenancies, not just what will wipe off with a cloth and a bit of soap. I.e. clean up any buildup off taps, sinks etc. polish up any stainless steel/brass etc., make sure there isn't a single smear on any windows or mirrors - you get the idea. We also use scents from Ecomist, however you could just as easily pick something up from Woolies for this purpose.

Painting - sometimes doesn't need to be done once the detailed clean is done - it is surprising how much walls will clean up with sugar soap and a sponge mop. If you go ahead with painting, make sure you keep spare paint for tenancy changeovers, so patching up any paint chips is quick, easy and painless (+ ensures your property remains attractive without the cost of repainting throughout).

Another helpful tip is to take good photos, whether you take these and straighten/lighten them yourself or have professional photos taken is up to you but this is very important for getting traffic through your ad (if you are advertising on realestate.com.au).

Ensuring all small maintenance is taken care of before showings is also important. Prospective tenants have no way of knowing what kind of landlord you are and seeing maintenance that obviously needs taking care of could plant seeds of doubt - particularly if you have a lot of competition. Sometimes this can be as simple as ensuring all light globes are working and no taps are dripping, however attention to detail is important. Not many people will notice the individual details, but the details are what make up the overall impression.

Good luck.

Kind regards,
Jody

 

[Whozat]

The good news is that you have plenty of notice about the change of tenancies, and also the rental market might have improved by next May. Additionally, interest rates may even trend down by then, or, at the least, you could fix at some attractive lower rates at the moment to get you over this hurdle.

You say your tenant will vacate in May and you are short of ready cash, so in that case I wouldn't worry about the airconditioning yet. You could have another 6 months from May before it becomes an issue.

Does the current tenant keep the place looking good eg. tidy, homely? If so, you'll have the advantage of any prospective tenant seeing the place in good order if you advertise it some weeks before they leave.

If might be worth considering using an agent this time, if only to have them find you a tenant.

Not sure how worn the carpets are, but they can be a turn off if they are too ratty. A paint job may not be necessary as per Jody's suggestion of a super clean.

If you advertise in advance of the current tenants leaving, and aren't getting suitable interest at the price you want, then be prepared to drop the rent to at least get a tenant in ASAP.

All the best.