6 reasons why it makes $ense to upgrade your investment property

1. Financial return.

Our experience shows that an appropriate upgrade to your property should provide a $2.50/week increase in rental for every $1000 you spend. For instance, if you invest $20,000 to upgrade your property, this should return a rental increase of $50/week.

$50 x 52 = $2600 per year

This increase in your rental provides a 13% return on your $20,000 investment, which is roughly twice as much as you would return if you invested the money in a bank deposit.

(Note: these returns are not guaranteed and you may want to seek further advice from your managing agent and accountant specifically relating to your property.)

2. Tax Benefits.

The ATO allows deductions for virtually all upgrade costs. Some costs are treated as repairs and are claimable in total in the first year. Other costs such as carpets can be depreciated over 10 years. Further, costs such as painting, door handles etc can be depreciated as a capital cost at 2.5% for 40 years.

**Also don’t forget if your property was built after 1984 you can depreciate the build cost of your property at 2.5% per year for 40 years. (Please note this will have capital gains implications when you sell this property).

Property Revive can arrange for a building surveyor to provide a total valuation of all assets which is accepted by the ATO. This claim can also be backdated at least 2 years subject to discussions with your accountant.

Useful ATO links

Introduction for property investors

Guide for rental property owners

3. Quality tenants.

An upgraded property will help to attract good quality tenants who are much more likely to properly care for and maintain a property if they start with a well presented property.

4. Increased property value.

If you are upgrading your property with a view to sale we would be working towards you achieving an increase in the value of your property which is at least twice the cost of your investment.

For instance a $30,000 upgrade should improve the value of your property from between $60,000 to $90,000. (Please note we cannot guarantee these results)

If you are renting out the property, the increased value of the property will enable you to increase your potential borrowings for further investments.

5. Reduce maintenance costs

A property upgrade will minimise the ongoing maintenance costs during a regular tenancy. An upgrade will address all the normal maintenance issues such as plumbing, electrical, leaks, mildew, faulty appliances etc.

6. Consolidate relationship with managing agent

Investing in your property shows your managing agent that you are serious and committed to achieving the best results. In turn they will work harder to find the best tenants to pay the maximum rental knowing the property has been presented at its highest potential and will have fewer maintenance issues.