When most people think about Valentine’s Day, tax depreciation generally isn’t the first thing that comes to mind.
It probably doesn’t even rate a mention, to be fair.
But at BMT Tax Depreciation we like to think that Valentine’s Day is the perfect time to show your investment property some love.
Here are some practical tips to improve your investment property this Valentine’s Day. Pick out a few and don’t be surprised when your investment property shows you some love in return.
1. Add appeal with cosmetic improvements
Undertaking some cosmetic improvements is one of the easiest ways to show your property some love and improve its value and appeal.
Cosmetic renovations are improvements or updates that don’t affect the structure of a home. This could include painting, updating flooring, installing new window coverings or changing the light fittings. While these updates are generally cheaper than structural renovations and quicker to carry out, they can also give you greater bang for your buck as they usually make more of a visual impact.
While a fresh lick of paint and some new carpets may not seem like huge tasks, they can make a huge difference to the property’s appeal to tenants and improve your rental return.
2. Make an impact with a structural renovation
If your property – or certain rooms in your property – has seen better days, and its dated, impractical or wearing interior is turning tenants away, consider undertaking a renovation.
Focus on improving core rooms including the kitchen and bathroom – these rooms are often drawcards for tenants and buyers alike. If they’re quite dated and well beyond the help of some cosmetic updates, a remodel is a fantastic way to capitalise and improve appeal.
While it may seem like a large expense, such improvements can generally attract a higher rental or sale price meaning you should be able to make that money back over time. Owners and investor should be cautious, however, not to overcapitalise when renovating.
Don’t forget to consult with a Quantity Surveyor prior to any renovations or updates. You should be able to scrap any items you get rid of (old carpets or kitchen appliances, for example) and claim depreciation for the full effective life of newly installed assets.
3. Show your good tenants some love
Never underestimate the value of holding on to a good tenant. Not only do you have the assurance your property is being taken care of and treated with respect, a long term, good tenant saves you the costs associated with re-advertising and finding new tenants.
There are lots of things you can do to show your tenants your appreciation and encourage them to stay. Ensure you address any issues, requests or repairs in a timely manner, be respectful of their privacy and keep in mind that while it is your property it is the tenant’s home.
As a nice touch, you could ask your Property Manager to pass on your thanks to a long term tenant, send them a bottle of wine when they re-new their lease for another year or mail them a card at Christmas time. While these are small gestures, they don’t often go unnoticed.
4. Get organised
While there’s nothing romantic about organising paperwork and sorting out your finances, it’s a good idea to keep on top of these things so you know what’s happening with your investment and you don’t fall behind, potentially missing something important. If you’ve been putting these tedious tasks off for a while, imagine the satisfaction you’ll get when the job is complete – better than any box of chocolates.
5. Review your strategy and investment performance
Any savvy investor will know that it’s important to have a strategy in place and regularly review their property’s performance to see if they’re on track with their investment goals.
Just like a real life relationship, your investment will grow and change over time, so it’s important to ensure you’re aware of how your property is performing and if it is in line with your investment goals.
6. Review the rent
If you haven’t reviewed the rent you’re charging in a few years, now’s the time to do so. There are disadvantages to both undercharging and overcharging rent and you want to make sure you are charging the correct amount in line with current market conditions and the true value of your property.
Chat to your manager about this if you haven’t done so in a while. Ideally, you might find your current rent can be boosted up slightly.
7. Claim all tax deductions
As a property investor you are entitled to a range of tax deductions. If you haven’t already done so, you should order a tax depreciation schedule for your investment property. On average, this can save investors between $5,000 and $10,000 on a residential property in the first full year alone. It’s be hard to get a better Valentine’s Day present than that!