- Making money from your investment property is not a given
- You need to ensure you keep up with the upkeep
- Esther Nilson provides 7 areas you should look out for
It’s well known that property markets are hot right now and prices are increasing as demand still outweighs supply.
Your property manager may be advising on potential rental increases, so that you can capitalise on the current market conditions.
Whilst it is true that your property may realise a slight rental increase ‘as is’, a common misconception amongst owners is that they can raise the rent exponentially on the back of the market upswing, without having carried out any repairs or improvements.
Yes, tenants will probably accept the property if they are desperate and have nowhere else to go, but the property condition is likely to be reflected in the type of tenants who apply.
So whilst there are stories of quick leasing turnarounds, some properties just aren’t leasing for some time because they are rundown.
Keeping things up to scratch
It’s a massive job and cost, to bring it back up to scratch to achieve the price you want and meet the sales market.
Repairs and improvements should be front of mind when the opportunity presents itself when the property is vacant between tenancies (for larger improvements) or throughout the tenancy, when asked to do so.
A property manager’s job is not just to collect rent and ensure the property is clean and tidy.
A good property manager will evaluate the property at each inspection, and provide suggestions during the management period to maintain its value and capital growth.
If this doesn’t happen, the property will deteriorate in condition and value. Remember that outlaying costs for improvements will only enhance your asset.
Ensure you speak with your accountant or financial advisor for advice on the taxation benefits, and remember also that improvements and new appliances can be added to your depreciation schedule.
7 maintenance tips
Here are some tips on how you can improve your property’s appeal and capitalise on the market:
- Painting – wear and tear, as well as sunlight over time, causes the walls to look tired. Freshen up with a new neutral paint job every 7 years.
- Carpets – these should be professionally cleaned between tenancies, but depending on the quality of the carpet, it can wear thin in doorways and start to pull and unravel, general marks become ingrained and it starts to look dirty, even after a professional clean. You should budget for replacement every 10 years.
- Air conditioning – Australian climates can be dry and hot for long summer periods, but also can be humid on occasion. Perhaps consider investing in ducted reverse cycle air conditioning or, at the very least, split system air conditioners in the living room and bedroom(s). Evaporative units work well in some suburbs but not in others. Aircon is something most tenants deem essential.
- Dishwasher – it’s not considered a luxury anymore, it’s a necessity. Tenants lead busy lives too. What is a convenience for you, is also a convenience for them.
- Showers – regrouting usually needs to be done every 5-7 years. Harsh chemicals and abrasives used to keep these areas clean from mould and soap scum take their toll. If your grout is cracked or missing, water will leach into the wall and you will end up with moisture damage that can also affect flooring in adjacent rooms or passageway. A fresh appearance will appeal to tenants.
- Gutter cleaning – it’s an owner responsibility. Clean the gutters annually or more frequently if there are lots of surrounding trees. Full gutters and downpipes results in backwash into the eaves, causing unsightly staining and mould.
- Low maintenance yards – provide this unless a tenant has a green thumb and loves to spend hours in the garden. Most don’t have the time. Consider limited lawn space, native and waterwise plants. Most tenants aren’t keen on paying for water usage, to keep large lawns lush.
A buoyant market may float your property boat for a period of time, but if not maintained it can also sink.
Remember, a healthy property = quality tenant = healthy investment return.