One of my clients has a one bedroom investment in Sutherland Shire in an older style apartment building built in the 1960’s. The agent cant lease the property, the property became vacant right after the worst of the first round of Covid-19.
“Jeremy, I don’t understand why I cant lease my property and all prospective tenants are $60-$70 less per week, than the previous rent I was getting. Its been vacant for almost six weeks. Plus the agent never returns my calls…”
Using Invest Smart tools That Real Estate Guy reviewed the market, similar properties in region and surrounding suburb to my clients one bedroom investment property. It soon became evident the hundreds of new units had entered the market and the some of the older stock units which were in poor condition were not renting easily or attracting the wrong type of tenant. The condition of the unit was in average to poor. The key features considered were demographics in the area and how much a tenant in this market was prepared to pay rent for an older style unit in a smaller block of units which well from their external appearance, however an older style of architecture, ten minutes walk to transport, parks, schools, local shopping centre, cafes and the beach. How much would a prospective tenant pay for a poor, average or very good condition apartment in the immediate vicinity. After carefully reviewing the physical features of the apartment and comparing the current appearance to the newer style apartments, the gap between the older and newer style internal appearance was obvious. This apartment had three tenants over the last twenty years and no real investment, other than the occasional deep clean and minor maintenance had been completed. The unit was old and tired, the two main features of any apartment being the kitchen and bathroom needed attention, next the flooring, then the paintwork and deep cleaning would do the rest, we could replace more items, however the renovation isn’t
about perfection, its about “rent to market effectiveness” (Invest Smart tools calculate this).
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The business outcome, rental properties are a business and as such success & failure need to be measured. After the renovations were completed we hired a new real estate agent, organised marketing photos, professional real estate photos are worth the expense. There are photographers that have become specialists in real estate photography and don’t charge a lot of money for a set of four or five photos for apartments. Its makes the newly renovated apartment look even better, considering the current state of the rental market is very competitive, every additional tool which helps promote your properties value proposition, is money well invested. The renovation ended up costing almost $23,000 which included a new kitchen, new appliances, electrical and plumbing, new paint work, new wooden flooring which included sound proofing to strata standards, new hardware for the bathroom, plus a deep clean. You may consider talking to your accountant about how property renovations expenses can produce tax deductions which may offset both operational and capital expenditure items, this may assist you in neutralising some of the renovation costs.