HomeBeautiful
  • Open Homes
  • Bathroom
  • Kitchen
  • Outdoor
  • Decorate
  • Hamptons
  • Podcasts
  • Beach House
  • hacks
HomeBeautiful
  • Open Homes
  • Bathroom
  • Kitchen
  • Outdoor
  • Decorate
  • Hamptons
  • Podcasts
  • Beach House
  • hacks
Subscribe
Getting your coastal kitchen floor plan right
Watch 2:03

Getting your coastal kitchen floor plan right

{headline}

{headline}

A Hamptons-inspired family home on Sydney's lower North Shore

A Hamptons-inspired family home on Sydney's lower North Shore

House Rules is coming soon!

House Rules is coming soon!

Before and after: a stunning bathroom renovation

Before and after: a stunning bathroom renovation

Before & after: a Melbourne home is transformed

Before & after: a Melbourne home is transformed

{headline}

{headline}

Our Dream Kitchens & Bathrooms special is out now

Our Dream Kitchens & Bathrooms special is out now

An old cement factory is transformed into a stunning home

An old cement factory is transformed into a stunning home

Amazing transformation: from run-down caravan to sleek office space

Amazing transformation: from run-down caravan to sleek office space

{headline}

{headline}

Budget kitchen makeover: 9 ways you can improve your kitchen without breaking the bank

Budget kitchen makeover: 9 ways you can improve your kitchen without breaking the bank

Three ways to keep your bathroom renovation costs down

Three ways to keep your bathroom renovation costs down

How to future proof your reno

How to future proof your reno

7 quick and easy ways to soundproof your home

7 quick and easy ways to soundproof your home

This renovated desert shack broke the internet

This renovated desert shack broke the internet

The Three Birds’ latest renovation! We reveal the stunning backyard.

The Three Birds’ latest renovation! We reveal the stunning backyard.

The Three Birds’ latest renovation! Front formal lounge room, laundry and study

The Three Birds’ latest renovation! Front formal lounge room, laundry and study

  1. Home
  2. Renovate

How to know whether a property reno is worth it or a waste

So you can make the right decision - by Starts at 60 writers
  • 12 Oct 2017
How to know whether a property reno is worth it or a waste
Simon Whitbread

New units are cropping up by the dozen, and last month all four of Australia’s major banks (and some smaller ones) raised rates on interest-only home loans.

The rate hikes were between 0.3 and 0.34 per cent, which might sound manageable in isolation. But for the many Australians who own multiple investment properties, it’s a sucker-punch.

According to Morgan Stanley analysts, the rate rises will result in approximately $900 million of extra annual profit for the banks.

So no, it’s not a small problem, but since there’s no way around it, the question now becomes how you can make your investment property stand out in a sea of units, to ensure you have rent coming in to help cover those higher repayments?

Maya William of rent.com.au has a few good suggestions on the issues to consider.

Renovating a property in order to secure a better rental return is an investment in itself, so the first step in weighing your options is to remove emotion from the decision and look at it from a purely financial perspective.

“If you spend $25,000 on the upgrade to make an extra $50 a week, that’s 10 years to get your money back,” William points out. “Longer if you include tax and depreciation.”

By the time you pay off the amount spent on a renovation, your investment property may need other minor upgrades; you can easily get caught in a vicious cycle of spending too much for too little yield.

Location will always play a part in how much you can afford to spend on a property, but owning something in a great suburb isn’t a precise indicator.

For example, rental opportunities will be snapped up relatively quickly in Sydney and Melbourne no matter their condition, simply because there is more demand for location than for quality. This means that a big investment may not be required to secure a good rental income in these cities.

Thanks to a slower market, though, fantastic rental properties in Perth could sit vacant for weeks or months at a time. And even then, William cautions, you could be pressured to reduce your rent to meet the market.

It can be difficult to assess the pros and cons on your own, but there’s no harm in asking a local rental agent for their opinion on the type of renovation you have in mind. They can help you determine a reasonable spend before you start. 

If you can’t afford to do something drastic, such as renovating a kitchen or bathroom, you can always turn your eye to cosmetic changes. A fresh coat of paint, new window dressings, and tidying up the front yard to enhance curb appeal could help to secure a tenant. Even something as small as switching to modern light fixtures or steam-cleaning carpets can make a big difference to the way prospective renters view your property. 

“The only real answer is to approach the investment like an accountant,” William says, i.e. think of what’s best for the property and your investment as a whole, not just about the aesthetics.

Once you’ve secured a renter, meanwhile, there’s one piece of advice that William says everyone should follow:

“If you have a tenant and you are happy with that tenant, then be a great landlord. It is always easier – and generally more financially rewarding – to keep a customer than to find a new one.”

This article first appeared at Startsat60.com.

FREE Miranda Kerr Mug-SAVE 31%

by Royal Albert, when you subscribe

Subscribe Now
FREE Miranda Kerr Mug

FREE Miranda Kerr Mug-SAVE 31%

by Royal Albert, when you subscribe

Subscribe Now
FREE Miranda Kerr Mug

Recommended to you

Getting your coastal kitchen floor plan right
Watch 2:03

Getting your coastal kitchen floor plan right

{headline}

{headline}

A Hamptons-inspired family home on Sydney's lower North Shore

A Hamptons-inspired family home on Sydney's lower North Shore

House Rules is coming soon!

House Rules is coming soon!

Before and after: a stunning bathroom renovation

Before and after: a stunning bathroom renovation

Before & after: a Melbourne home is transformed

Before & after: a Melbourne home is transformed

{headline}

{headline}

Our Dream Kitchens & Bathrooms special is out now

Our Dream Kitchens & Bathrooms special is out now

An old cement factory is transformed into a stunning home

An old cement factory is transformed into a stunning home

Amazing transformation: from run-down caravan to sleek office space

Amazing transformation: from run-down caravan to sleek office space

{headline}

{headline}

Budget kitchen makeover: 9 ways you can improve your kitchen without breaking the bank

Budget kitchen makeover: 9 ways you can improve your kitchen without breaking the bank

Three ways to keep your bathroom renovation costs down

Three ways to keep your bathroom renovation costs down

How to future proof your reno

How to future proof your reno

7 quick and easy ways to soundproof your home

7 quick and easy ways to soundproof your home

This renovated desert shack broke the internet

This renovated desert shack broke the internet

The Three Birds’ latest renovation! We reveal the stunning backyard.

The Three Birds’ latest renovation! We reveal the stunning backyard.

The Three Birds’ latest renovation! Front formal lounge room, laundry and study

The Three Birds’ latest renovation! Front formal lounge room, laundry and study

HomeBeautiful
  • About Us
  • Subscribe Today
  • Contact Us
  • Terms and Conditions
  • Privacy Policy
HomeBeautiful Magazine Subscribe
  • About Us
  • Subscribe Today
  • Contact Us
  • Terms and Conditions
  • Privacy Policy

Brands

  • Beauty Crew
  • marie claire
  • Who

Our Network

  • Better Homes and Gardens
  • BHG Shop
  • New Idea food
  • New Idea
  • Girlfriend
  • That’s Life
  • All Recipes
  • Practical Parenting
  • 7plus
  • 7News
  • Health Engine
  • The West Australian
  • Perth Now
  • Airtasker
  • Society One
  • Starts at 60
© 2021 Are Media PTY LTD
Get more from

Magazine Subscription Offer

FREE Miranda Kerr Mug-SAVE 31%

Shop This Offer
FREE Miranda Kerr Mug