Owning an investment property is like running your own small business. You have income (ie rent) and expenses (ie mortgage payments, maintenance, rates, and other fixed costs).
Investors also need to put thought into how they plan to maintain their capital growth by dealing with the accumulative effects of wear and tear.
All properties suffer the effects of age and regular use. Under Qld tenancy laws, tenants are not liable to remedy the effects of normal use or the aging of a property. This is up to the owner. (See below for some examples).
Because these items are not ‘urgent’ repairs, some owners feel it is not necessary to attend to them.
Over time, however, the property can start to appear ‘tired’ and dated. We are finding that about 5-7 years is the average life span for such fittings.
Astute property investors understand that a property in a ‘tired’ condition will affect the capital growth of their investment. It also could prevent rental increases, as tenants won’t pay more rent for an older-looking property when there are so many new properties available for rent.
The solution is to set aside funds every month to cover the cost of major refurbishments such as re-painting and new carpets.
At each property inspection, your Property Manager will assess its condition and make notes in the inspection report.
It is vital that you read these reports so that you are fully informed about the condition of your property.
The best time to attend to major refurbishments is between tenancies. When a tenant is due to move out, discuss with your Property Manager what can be done to keep the property looking ‘fresh’ and competitive. We deal with a variety of contractors who are able to quote and complete any job within a timely manner.
And don’t forget to ask your accountant the best way to go about these refurbishments so that you can maximise your tax returns at the end of the financial year.
Examples of what will happen to a property over time:
- Paint discolouration or disintegration
- Scuffed walls
- Worn & frayed carpets
- Deterioration of curtains and blinds
- Deterioration of fittings such as light fittings, bathroom fittings, kitchen & bathroom cabinets, etc.
- External—grimy house exterior and paths