Just wanting to know from others WHEN they choose to renovate?
When buying an older-style IP, do you?
- Thread starter CairnsInvestor
- Start date
Depends on how 'basic' you mean by basic? Personally, if its a long-term IP and you can afford the negative gearing (I am assuming that it would be), then leave as is initially, and then overtime do the reno's.
Another thing to bear in mind, is that these costs are initial repairs and not deductible, only depreciable. If you can rent for say 12 months, more chance to claim part of the costs eg painting or carpeting as repairs.
I am in this same situation currently. Settling on property soon, and didn't think that I could rent it out as is. I know I wouldn't or couldn't live in it, but someone might, for nominal rent. Will cost me (pre-tax) ~$10k to do the basics compared to losing an extra $7.5k in gearing by renting it as is. It effectively buys me one year to determine what to do.
Another thing to bear in mind, is that these costs are initial repairs and not deductible, only depreciable. If you can rent for say 12 months, more chance to claim part of the costs eg painting or carpeting as repairs.
I am in this same situation currently. Settling on property soon, and didn't think that I could rent it out as is. I know I wouldn't or couldn't live in it, but someone might, for nominal rent. Will cost me (pre-tax) ~$10k to do the basics compared to losing an extra $7.5k in gearing by renting it as is. It effectively buys me one year to determine what to do.
We added an extra bedroom/study in our first IP. Took us about a week to add a wall and door to the rumpus room and only cost about $1k but added an extra $50 in rent and probably $50k in value.
But I now agree with Mystery and just do the basics to make it look clean. Plus we put in a dishwasher which helps to rent it quickly.
Cheers,
Bazza
But I now agree with Mystery and just do the basics to make it look clean. Plus we put in a dishwasher which helps to rent it quickly.
Cheers,
Bazza
I am the only person to vote for the total refurbishment option...althogh I see the positive side to all of these options!
Of course we all know that the capital appreciation of the land under an IP is what truely makes us rich and sets us free, however after completing 3 total refurb renovations on rental properties we have had properties that are very easy to let (managed by ourselves), require virtually zero maintenance for 7 - 10 years and best of all....we don't get calls from tenants saying that something is not working.
In between tenancies I replace any tap washers that are not sealing proprely, give all door locks a spray with olive oil spray and replace the shower curtain with a new one from Bunnings...hey presto, everything works like new again.
Glenn
Of course we all know that the capital appreciation of the land under an IP is what truely makes us rich and sets us free, however after completing 3 total refurb renovations on rental properties we have had properties that are very easy to let (managed by ourselves), require virtually zero maintenance for 7 - 10 years and best of all....we don't get calls from tenants saying that something is not working.
In between tenancies I replace any tap washers that are not sealing proprely, give all door locks a spray with olive oil spray and replace the shower curtain with a new one from Bunnings...hey presto, everything works like new again.
Glenn
We do the basic stuff to enable us to get the best rent possible without spending a lot of money.
Example.... house we bought about six years ago we could have rented "as is". IF we could find someone who wanted brown shag pile carpet tiles in the lounge, red shag pile carpet tiles in the main bedroom, "original" kitchen and bathroom. We ripped up the carpet and had the floors polished and painted the internal walls. From memory I think we painted the kitchen but not sure whether we put in a new "cheap" kitchen straight away.
Anyway, we tend to do the minimum required to make it desirable for tenants. The less desirable the house, the less desirable the tenants = problems.
Another example. The IP we bought ten years ago was also "original". We couldn't afford to polish the floors, so we coated them with estapol ourselves a few times between tenants. Improved the look but nothing like the real thing, which we did between tenants when we could afford to. Put in a new kitchen between tenants. Painted inside another time. Added a huge deck while tenants were in. Added air-con split system while those same tenants were there. Slowly, the house has turned from a ugly duckling into something approaching a swan. Not to the standard I would like to live in, but somewhere between basic and pretty nice.
Each time we have spent money, we have been able to increase the rent over and above the increase we could have asked just due to the normal rising market.
As the house has looked better and better, the quality of tenants has improved.
Just had a look at it yesterday as tenants will be moving in a month after five years there. The yard looks tired and shabby and needs a good clean up and shrubs need cutting back. Parts of the back yard have huge shrubs intruding on the grass by three metres. I would not like potential tenants to look at the house right now until we spend a day there because many people cannot see past the long grass and general untidiness.
But a day or two of hard work (by us, or a tax-deductible paid yard man) will bring it up again. I might need to touch up some paint internally. We are reconfiguring the front entry to give us an extra bedroom, so rent will go up considerably - in part because we have not kept up with the market).
Wylie
Example.... house we bought about six years ago we could have rented "as is". IF we could find someone who wanted brown shag pile carpet tiles in the lounge, red shag pile carpet tiles in the main bedroom, "original" kitchen and bathroom. We ripped up the carpet and had the floors polished and painted the internal walls. From memory I think we painted the kitchen but not sure whether we put in a new "cheap" kitchen straight away.
Anyway, we tend to do the minimum required to make it desirable for tenants. The less desirable the house, the less desirable the tenants = problems.
Another example. The IP we bought ten years ago was also "original". We couldn't afford to polish the floors, so we coated them with estapol ourselves a few times between tenants. Improved the look but nothing like the real thing, which we did between tenants when we could afford to. Put in a new kitchen between tenants. Painted inside another time. Added a huge deck while tenants were in. Added air-con split system while those same tenants were there. Slowly, the house has turned from a ugly duckling into something approaching a swan. Not to the standard I would like to live in, but somewhere between basic and pretty nice.
Each time we have spent money, we have been able to increase the rent over and above the increase we could have asked just due to the normal rising market.
As the house has looked better and better, the quality of tenants has improved.
Just had a look at it yesterday as tenants will be moving in a month after five years there. The yard looks tired and shabby and needs a good clean up and shrubs need cutting back. Parts of the back yard have huge shrubs intruding on the grass by three metres. I would not like potential tenants to look at the house right now until we spend a day there because many people cannot see past the long grass and general untidiness.
But a day or two of hard work (by us, or a tax-deductible paid yard man) will bring it up again. I might need to touch up some paint internally. We are reconfiguring the front entry to give us an extra bedroom, so rent will go up considerably - in part because we have not kept up with the market).
Wylie
I voted do nothing, but then again I'm planning to develop down the track.
This would have to be one of the main deciding factors. If you plan on keeping the property longer term, and want a good value and higher rent - then you'll spruce it up and upgrade (epsecially if it's a nice character home etc). If you're looking to develop, you'll only do what needs to be done.
This would have to be one of the main deciding factors. If you plan on keeping the property longer term, and want a good value and higher rent - then you'll spruce it up and upgrade (epsecially if it's a nice character home etc). If you're looking to develop, you'll only do what needs to be done.
I am in a similar situation also. The property is tenanted, but I plan to do minor reno, (ie paint, some new doors, new garden etc) when I can get a week off work. Because I live interstate, I had to get a contractor to do an initial exterior clean of the property. It took a month to organise because the tenant would not return calls from anyone except from the PM. (as opposed to the contractor) It is so frustrating. I would rather just go there myself for a week or two, and get everthing sorted out. It's like trying to get an appointment for a dentist in the public health system. 
Phil
Phil
I agree with this option. It atracts better tenants and if they're happy, they won't be bothering you.
