Owning investment property can be a trying experience. Whether or not you make a profit has a lot to do with the decisions you make, such as how much rent to charge, when to make big additions or renovations, etc. Also knowing what renovations to make can help you to maximize your revenue.
Improving investment property is different from improving your own personal home in a few ways. For one thing you don’t have to live with the outcome of your renovation. You might also be able to write off some of the expenses from renovations on your taxes. Finally (and somewhat connected to my first point) you won’t be enjoying the fruits of your labor.
When renovating investment property it’s important that you not take it personally. You’ll want to make good workmanlike improvements so that you have happy tenants who want to inhabit the property for a long time, but you don’t have to go all out and if you like profits sometimes it’s important that you don’t. For instance, if you have a duplex that you rent out in a neighborhood filled with other duplexes you don’t want to over improve your unit.
In this way renovating investment property is exactly like renovating your own home: if you expect to see a profit or return on your investment you can’t improve your property to a high degree over those in the neighborhood. You might love the idea of lavishing your tenants with granite countertops and hardwood floors, but if the unit is located in an area with low to middle income tenants you might not be able to charge sufficient rent to see a profit from your improvement investment. Those tenants will likely choose the unit down the street that has adequate features for their needs with a lower monthly rental expenditure.
Making smart choices when it comes to improving investment property will help you maximize your profit and return on the investment. You should of course keep your property well maintained, but be careful not to let your personal sense of graciousness cost you. For more tips on renovating investment property visit MICM.com.au and Renovationrobot.com.au.