Maximise returns on your investment property
Every investor hopes to buy property at a low price and then rent or sell at a higher value, to maximise returns on investment property.
The level of profit is directly related to what the unit currently has to offer versus its future potential.
What this means is that when you are searching for real estate, you should not only look at what is there, but also visualise what there could be in the future.
Would it be possible to remodel the bathroom for a reasonable price? Could you replace the carpet with hardwood flooring? Is there room for a washer/dryer?
Modern touches allow you to expand your tenant market and charge a higher price.
What starts out as an unremarkable piece of property could be completely redone in three to six months – dramatically increasing in value.
If renovations and upgrades are not in your expertise, perhaps you could enlist a friend’s help in discovering ways to open up a room, let in more light or expand kitchen space.
Researching figures will help you determine which refurbishments will benefit you in the long run and which ones won’t pay off.
If you want to implement some changes, but do not have the budget to carry them out, there are several low-cost strategies that can make a big impact, to maximise returns on your property investment.
A fresh coat of paint, for example, adds a touch of brightness with little effort and cost.
Replacing doorknobs, window trimmings and light fixtures can also add modern appeal without breaking the bank.
The important thing is to be realistic about what you can accomplish and do not begin before you have made a detailed plan and budget for what you intend to achieve.
While there is often potential in buildings that could use an upgrade, sometimes there is just no chance of making a good return on your investment.
Do your research, seek professional guidance and keep a level head when it comes time to make a decision.
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Cosmetic makeovers rather than full reno jobs can end up being quite a profitable strategy to follow
One of our apartments (number 2) was previously rented for $170/week but the tenant moved out. We've had it painted internally and tidied up a couple of jobs for a cost of $1,550.
Since then the tenant from number 1 has moved in from next door and is happy to pay $185/week.
So, based on receiving an extra $15 per week rent we are getting 50% return p.a. on the reno cost and if it was to be sold on with a 7% yield it has added $11,142 to the value.
We could have spent more and done the carpet, kitchen, bathroom, etc. etc. but the ROI would not have been as good and I was happy with the outcome by just having it vacant for a couple of weeks for a mini-makeover.