Since the beginning of time, investment properties have been sold as an investment that reduces your taxable income. This is what negatively geared means – your rent doesn’t cover the cost of your property. In return for losing money, the government reduces your taxable income, which effectively means you get a tax refund. YES, you did read this correctly, you are losing money every year – and property investors are excited about this! The idea behind losing money is that your property goes up in value at a greater rate than the loss you are incurring on a yearly basis.

An example:
Annual income $23,400 (rent)

Annual cost $28,000 (interest repayments, management fees, rates. strata, repairs and water)

Loss – $4,600

To ensure your investment is building wealth, your property must be growing by at least $4,600 a year, or $46,000 over ten years. Unfortunately, for most, this hasn’t been the case.

However, in today’s low rate environment, the interest rate on your investment property should be under 4%. For most this means their investment property is positively geared (the income is greater than the expenses). This is a great position to be in, as it means your investment is making an income.

So how do you capitalize on this newfound income? How do you ensure you get a new tenant quickly and they pay even higher rent? Especially, if you are competing against other investors with similar properties.

One way to ensure you get a tenant quickly and they pay more is to update your kitchen and bathroom. Give the property a quick coat of paint and freshen up the floors and curtains. Not only will this increase your rent, it will also help keep that tenant in your property for longer.

So how do you do this mini-renovation quickly?

•  As soon as your tenant gives notice, get some quotes.
•  Ask your real estate agent if they can recommend an investment property renovation specialist. Investment property specialist understands time and money. They understand you need the renovation to look great, keep the cost down and do it quickly.
•  Workout a budget – how much can/should you spend on your investment property to give you the best outcome. Speak to your real estate agent about the possible rent increase, better quality tenant or reduced vacancy.
•  Make sure you receive a written quote.
•  Confirm start date and discuss turnaround time. Remember sometimes things don’t go to plan, so make sure you have a little extra up your sleeve.
•  Speak to your real estate agent about getting photos and advertising the property the day the renovations are completed.
•  Celebrate your new investment property with a great tenant.

Ethan McDonald has been a property investor for over 20 years. His portfolio not only spans across the country but also internationally.