Over capitalising on renovating an investment property

Sunday, 10th Apr 2011
Categories: Newsletter

However, there is a distinction between repairs and improvements. Do not over-capitalise on the property and make improvements that may not be necessary because each additional dollar you spend must give you a return.

In most price segments, a property does not have to be “brand new” to rent, however, it must feel clean, livable and safe. Therefore you should focus on items such as:

(i) Thorough professional clean
(ii) Steam clean carpets
(iii) Air conditioning
(iv) Security

Carrying out major renovations to a property before you rent it out may not be cost-effective because you might be making improvements to rent the property out at a price that you might have received anyway. It is important not to over-capitalise and if you are to add value to your property, be sure to plan this carefully so that you enjoy maximum return on the improvements you make to the property.