Do you renovate or make an extension on an Investment or
not?
Let me tell you about a CATCH 22 situation I
was personally in.
I had an Investment Unit in the inner city of Melbourne and on the agreement
I had a lease of the front courtyard for 100 years. The only fallback was
that to get to the courtyard you had
to walk out the front door, through the hall way of the building, walk
outside to the front of the building and open a side gate to get into the
courtyard - crazy but true!
So I had a good talk to my Property Manager, asking him if it would be worth
removing one of the windows in the bedroom which over looked the courtyard
and inserting a double sliding door so the unit could have its own direct
access to the courtyard.
1- Concrete the yard and landscape the edges to suit.
2- Plant large bushes around the fence line for privacy as just in
front of the courtyard was a bus stop.
3- Remove the window and insert double sliding doors with security screens.
4- Install a clothes line.
Cost of the entire job?
Approximately $8000.
So you're probably asking, "What is the negative to this picture"?
Well, even though I would spend all that money on a simple renovation the
only extra rent it would bring in for me was $10-$15 a week.
The positives were - much easier to get a tenant in as it's the only unit on
the block to have a private courtyard and its own personal clothes
line, plus it would increase the value of the
property by approx $40k-$50k.
So really when you look at it, I spend $8,000 to make an extra $15 per week?
Yes, I did go ahead with the renovation because I had enough equity in the
unit to finance the renovation so it would pay for itself in the end.
The lesson here is every investment must be studied separately just like a
business. Its there to do one thing for you and one thing alone - produce
an income and increase in value.
I have seen people overspend on an investment by thousands and at the end
they over capitalize and do not see any result from it for years.
Remember, treat property investment like a business.
It's like when I refer my clients to my property specialists and some people
look at the areas where they should be investing in and decide not to. Why?
Because they are not looking at the potential of the investment but rather
what it is today.
Times change and because we do so much research on selecting the right
areas, in-experienced investors cannot visually see why we have selected
these areas for Investing.
Before we refer you to an investment, it has gone through our check
list and made sure it meets all the criteria's of an ideal investment.
If you would like to know what areas we are recommending at the present
moment, please go to the link below and fill in your details.
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