Ensure your investment gives you a bang for your buck
Owning an investment property can mean flexibility when it comes to adding value. Ensuring you get a return on your investment will always be a top priority. Whether you’ve just purchased your first investment, or are looking to add to your portfolio, these tips could help boost your investment strategy.
The key to adding value to your investment is to ensure you’ve done your research. Research can help you understand what features are going to appeal to potential tenants can help you focus your efforts and finances.
Opportunities to add value aren’t restricted to a fresh coat of paint. A renovation project can ensure the full value of your investment is realised. The type of renovation you’re looking to undertake could involve some other factors to think about — whether you’re renovating to make or save money, or whether there are parts of your property that require necessary or essential improvements.
As always, it’s important to do the right research before committing to any large piece of work on your property. This is to ensure you’re able to commit to, and finish, any work that you want to do to potentially improve and add value to your investment.
Here are some things you can change and improve to potentially add value to your investment property;
Kitchens and bathrooms can sometimes have a big impact when it comes to making a good first impression for potential tenants. Freshening up these wet areas can have a positive impact when it comes to increasing your asking price as a landlord.
Ensuring your property is pet-friendly may also have a positive impact on how much rent you can ask for. According to the RSPCA, more than 60% of Australian households own a pet, so it makes sense to include pet owners as potential tenants. Adding features such as secure fencing and removing carpet in favour of hard-surfaced flooring could add value to your investment.
Storage is always king. Simple, cost-effective storage solutions can dramatically improve your bottom line. It may seem trivial, but making sure a tenant can store all their possessions within your property could have a major impact on whether they’re going to want to live in your property.
Assuming that all renovations will add value to your property is a dangerous assumption to make, so doing the necessary research, and understanding the market is a necessary step before committing to any project.
If you have an existing investment property and are looking to renovate, speaking to an Aussie Broker can help you understand your financing options.
When you’re weighing up different ways to add value, don’t overlook the impact of tax. The cost of some improvements could be claimed immediately, but other expenses may need to be written off over time. Your tax professional can let you know the rules that apply to adding value to your investment property so that you claim all the deductions you’re entitled to, while still staying within Tax Office rules.
Whatever your development plans, start by getting to know the council rules for your area. Major developments, and even many renovations, need to meet strict council requirements and guidelines, and having the tick of approval from local authorities is essential to any project.
You’ll also need to consider the Australian Tax Office when it comes to developing investment properties. This is because developing is viewed as a profit-making venture. As is the case with all profit-making business, you’ll likely be taxed on any capital gains you make via investing in property. To get a better understanding of what tax implications may apply to you and your investment property, do your research, contact your tax professional for advice, or even contact the Australian Taxation Office directly so that you know where you stand.