Buying a quality property, in a good location, is an important foundation when it comes to owning an investment that will steadily increase in value over the long term. If you choose your investment property well and pay a good price below, or around the median value for the area, the odds that your investment will continue to grow are much better. A highly desired location and good opportunities for renovations will keep your ongoing investment needs low and mean you can be responsive to the needs of the market as the lifespan of your investment progresses.
Many buyers don’t realise that it’s possible to get renovation quotes before you buy a property, to get a true sense of what their investment might be and how feasible their plans really are. Of course, if you have already bought your property don’t be discouraged, there are still plenty of things you can do to ensure your investment makes steady gains and returns you the rental results you want over its lifetime. It can be worthwhile to consider the kind of return you have in mind for your investment. Do you have a percentage increase in mind specific to time periods – for example that your investment value doubles every 15 years? Or would you prefer to buy a renovator’s delight and flip it to sell at a profit of say 15 to 20% in a shorter time period? Maybe you just want to improve the property in general so you can justifiably increase your rental income earned from the property, to current or future tenants. There are plenty of cheap ways to do this. Whatever your investment strategy, here are a few ideas to get you started on increasing the rental yield of your property as well as the overall value of your investment, now and into the future.
Add extra rooms and open up the spaces
Understanding the original floor plan of your property is a great asset when it comes to simple and low-cost renovations. A small poky property can be transformed with a simple reconfiguration of the internal layout. Retaining supporting walls but knocking down others could increase room sizes, creating a more open plan layout or even adding whole extra rooms. Consider what the market is looking for, then what you have to work with – the result may be an extra bedroom, a study, a bathroom, a walk-in wardrobe or pantry, or even just some extra storage space. The simplest of renovations can be done in a weekend – knocking down one wall can connect a kitchen and lounge room, or turn two tiny bedrooms into one master suite with an option to add an en-suite or a walk-in wardrobe later. Simple changes like these can add thousands to the property if it changes the usable spaces considerably from their previous layout and attract an entirely different calibre of tenant.
Reconfigure wet areas
Lifestyles have changed and the open plan home has become a staple on the housing market in recent decades. Properties with separate kitchens or living spaces lock people away and have less appeal, so if you can open up any of the spaces in your property, consider making the investment; the transformation will be well worth it. A small kitchen attached to a decent sized laundry can be easily reconfigured, as can a separate toilet that sits between a bathroom and a master bedroom – increasing the size of the bathroom or offering the opportunity for an en-suite to the master. If your target market is young couples or professionals, then the whole laundry could be restructured to increase kitchen space or living space. Many buyers will take a larger kitchen with great storage and usable bench spaces, over a dead area in the form of laundry space they’ll rarely need. In reality it’s mainly large families who need bigger laundry rooms – the rest of us require little more than a pantry to store a washer/dryer combo in and perhaps a utility sink.
Smarten up your property
The smart house movement is well and truly here and many of us have an increasing interest in living sustainability, reducing costs and minimising the environmental impact our lifestyles can have. Houses that have integrated smart technology features aren’t necessarily an essential on a prospective tenant’s wish list, but can increase your minimum rental asking price if they represent a reduction in utility bills or extra levels of security. Smart solutions such as water tanks, solar panels, energy efficient lighting and internal climate control can influence a buyer’s decision to purchase a property, with many reported as willing to spend up to 30% more if the home is ‘smart’ enough. This kind of value impacts on your property over the longer term, but can also be applied in a tenancy situation, where families may be looking for lifestyle as well as financial value.
Increase the earning potential of the property
With constantly changing lifestyles and many people adopting more flexible work practices, what we need our homes to provide us with has changed dramatically too. The standard 3-bedroom family home no longer accommodates all the needs of a larger blended family for example; separated parents may decide to create a new home for the children with a separate studio space for the off-week parent. Even home offices are emerging as a more standard feature in many properties. So, the addition of what used to be known as the granny flat can now offer considerable opportunities when it comes to increasing the rental yield you receive from your property. A studio for work, teaching, consulting, or creative arts can be highly appealing for a freelancer or self-employed person for example. A fully equipped small studio can function as a parent’s retreat, a space for the step children or visiting grandparents, or maybe even a second tenancy option for you (assuming there is privacy between the two properties and separate entrances).
The non-essential luxuries that improve our lifestyle have become a key factor in increasing selling prices and rent for many inner-city homes. A split heating/air conditioning system (which for many IS an essential) is a great addition to one or two rooms in the house. Even simple things like ceiling fans, heated towel rails and higher quality window furnishings can give you the competitive edge in the rental market. Investing in new appliances and technology is often a great way to not only upgrade the property but to modernise a space such as the kitchen, without having to do a full renovation. Dishwashers, plasma TVs, video intercoms, washing machines, security systems, customised audio solutions from room to room – the list is endless. Choose high end brands to make the right impression, but keep your budget in check by looking for showroom display stock on sale, or slightly damaged goods.
Homeowners can enlist the help of a trusted real estate professional to consult on what changes to make. “The agent will keep them informed of changes in the marketplace. So they really need a team approach with the agent…and a bit of patience.”
Remember….. patience may be rewarded sooner than you might think.
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