Hi everyone!
I bought my first PPOR for $125,000 a couple of weeks ago and have now moved in. The problem is, being an old building in Brisbane, the place is always stinking hot. So here’s what I had in mind:
I asked as many people as I could if they would be willing to pay an extra $10 per week in rent to have a nice big airconditioner and every one of them said yes, one person even suggesting that he would pay $15-20 extra rent for a nice cool house.
So this got me thinking that an airconditioner theoretically should add $5200 value to my house correct? So I thought I’d buy one and get my place refinanced, essentially getting the bank to pay for the airconditioner.
$2500: airconditioner (3.5 hp reverse cycle split system)
$500: installation
$700: bank refinance fee
=$3700That leaves a very conservative $1500 left over (5200-3700) to spend on personal stuff, or even plug back into the home loan.
So… could I get some comments on this? I’m not sure if this will work or if I’m even thinking about this properly, but I basically want to do Dolf deRoos’ carport trick, except with an airconditioner instead of a carport
Thanks!
IanHi Ian,
That must be some airconditioner for your tenants, for $3000 dollars.
cheers
s.i.sQuote:Ian,I’d be tempted to get a cheaper air conditioner, borrowing the money so that there is some tax relief and adjust the rent accordingly
Spider
Ian… why $5 200 ?? In extra value to your house ?
Sorry if it seem’s silly, just trying to work this out
REDWING
Ian… why $5 200 ??Rent at $10 p.w = $520/year…
Is this right?
Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
Hey Matt,
$10 over 52 weeks = $520 dollars, im still not sure how he worked this out, but if it does add that much value, i will be definietly adding some air conditioners.
cheers
s.i.sHi
Ill just comment on Air Conditioning.
A 3 1/2 HP Air Con you can pick up rec conditioned for a lot less. I would suggest around $1000. I recently got a recond one(Cool only) for my parents IP – 2 1/2 HP for $250.
Check that the “switchboard” does not need upgrading to accomodate (more costs !!!)
I wouldnt pay another $20 pw for the comfort of one HUGE Air Con that cools a “whole” house.
Must be a small open plan type house.???
If not put a small split in main area of need ie. main bedroom.
I wouldnt like to pay the Power bill otherwise.
In the NT we are the kings of Air Con…….Even real minimal use this can add $100 min to a monthly power bill.
I dont understand the increased value you quote either ?? Sorry.Dolf de Roos quotes that if you can up your rent by $10 per week, ie $520 per year, that the capital value of your property (based on a rental of 10%) will go up by $5200. That’s the theory.
Ian, air con may or may not add value to your place, but for such a small amount it may not be worth it to refinance. I would ask a couple of RE Agents to tell you if it would add value, and how much. If they suggest that it’s enough to be worthwhile for you to refinance, contact one of the brokers on this site, and have a chat to them about the idea.
As it’s your PPOR, you might be wise just to pay the costs out of your own pocket, rather than putting it onto your house loan and paying for it over 30 years
Cheers
MelEven if installing an airconditioner doesn’t add that much value, and only increases your rental income by less than you expect, it will certainly lower your vacancies.
Anyone in their right mind will prefer a nice airconditioned place rather than living in a stinking hot place.[^]Thanks everyone for your input!
A couple of points: I’m not planning on living in this place for 30 years and so will sooner or later be a rental property.
Also, I had a valuer in a few days ago and told him about everything I wanted to do to the place, spending about $20,000 on it and he suggested that after those improvements, the place would be worth $170-180,000. The only problem is I can’t find the $20k
So I thought I’d do a bit at a time and in the meantime, enjoy the benefits of living in airconditioning
I know it would end up costing me a lot more in bank fees this way, but I can’t see any other way to get to the point of my place being worth $170k I guess what I need is a short-term $20k loan, but I have an expensive car loan to pay off (I bought that thing before I learnt about money), so I don’t like my chances of securing renovation finance.
All
This is a situation I found myself in sometime ago. The tenants said they would not be renewing their lease unless the place was airconditioned. An increase from $250 to $260 pw was negotiated. The ducted evap system was installed for $3900 and they signed on for another 12 months.
In my mind it was worth it to keep the tenants in place, particularly as there are plenty of other rental properties to choose from at the moment.
As for value added to property, that is hard to say.
To me the value was not having vacancy, a small increase in rent, appreciative tenants and no letting fees.Clive
Hi Guys
My wife and I bought an ‘up-market’ apt in Perth 2 weeks ago and I am in the process of installing a 2.5 HP Daikin Split R/C Inverter AC that is going to cost us $2730 including installation.
This is a top-of-the-range AC and the apts are all ‘wired’ for this brand, being a luxury complex.
The simple fact is that the apt will not rent without an AC and rentals factor this. There is no question of getting an additional $10 – $20 if an AC were installed in the apt.
This is West Perth I am talking about.
This reply is only a comment and may not add value to the discussuon thread, I am sorry.
Cool Regards
Godzilla[8D]
Morning [8D]
The benefits of the airconditioner are worth it (for yourself and future tenants-no disputes, especially since we had a ‘very hot 38deg’ XMAS and was 28deg at 0900hrsin Perth)
Being your PPOR though and re-financing etc etc seems exce$$ive to me.. don’t Harvey Norman have some pay no interest for 2yr deals or something- just pay it off ‘in-time’) explore your options if you’re cash strapped..
be careful not to overcapitilize on a ‘rental to be’ also, doing it yourself and slowly as you say, makes sense to me
My 2c anyway
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Thanks redwing, I will check out an interest free deal as I would have no problem fronting up with the money in two years time.
Speaking of Harvey Norman, I spent 40 mins negotiating a $1000 fridge down to $810 at Harvey Norman in the Boxing day sales <- proud of myself, had to tell someone! (at the same time, I saw a girl pay $948 for a fridge that said $948 on it and I cringed, knowing she could have got it for say $780 if only she tried).
Hi Ian,
Dam those guys at Harvey Norman are expensive and dont budge much with price. Well done on your bartering. Have you gone and tried Good Guys, always find them great for negotiating, and best thing too that works with them ive found is, that after you negotiate the price down, tell them your a student and they even knock the price down further more.
Other thing too is, if you have a good guys near by, sign up and take the privliege of being a card holder member, which offers you further more discounts but free delivery on items, and next time your at harvey normans or another large retailer, flash your Good Guys VIP card, and tell them to match the great benefits or do better.
Well done though… “A dollar Saved, is a Dollar Earnt”
cheers
s.i.s
Well done on your bartering.Hehe thanks, I think you mean bargaining… you make it sound like I swapped them a sack of potatoes for a fridge
I’ve still never been to the good guys yet, but everyone I know who has been there tells me they should have been called the worst guys. But I guess they’re making the comparison at a time when everyone is having a sale.
…back to the air conditioner… I found a suitable Samsung 2.4 HP at Hardly Normal today for $1599 + $550 installation (minus about $200 “ian” levy hehe). Oh yeah, you can’t bargain with them when doing an interest free deal either, you must pay retail price (not even the sale price on the tag, but full retail which is about $400 more at the moment).
Well, thanks everyone. I’ve decided that I will pay cash for the air conditioner (much cheaper), then wait till I’ve improved a few things before thinking about refinancing.
Well done Ian,
Though its a bit shocking, how much markup price and profit, these large companies… like harvey norman, bing lee and good guys charge.
oh well… life goes on
cheers
s.i.sYeah it would be interesting to see where your money’s going… I have a friend who works at City Beach and he says clothes/shoes/everything gets marked up about 200-250% there.
ian-from-brisbane
Hmmm.. there’s a Good guy’s down the road, sorry,[
] with the way i read your post earlier, i thought you were ca$h syrapped, and thats why your reasoning for re-financing also..Hardly Normal only ‘suggested’ due to ‘interest free’ deal, i’ve always got better deals ( usually cheaper and they’re happy to discount then when they pull up my address on ccomputer and see previous purchases the usually do some more discount to round figures etc) at Retravision when shopping for electrical gear..
S.I.S
Next time i need electrical goods i’ll check out my local Goodguy’s… i’m not a Uni student… but i know some [
]Met a guy who does ‘mirrors’ for H.N the markup is shocking
REDWING
I’m not exactly cash-strapped, I just don’t have $20k
More like 4.
] with the way i read your post earlier, i thought you were ca$h syrapped, and thats why your reasoning for re-financing also..
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