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Property Provides Opportunities to Add Value

Monday, May 19, 2014

 

Very little effort can bring about substantial gains by adding value to your real estate investment.

Something as simple as clearing up the garden, a coat of paint, new carpets, modern bench tops or a new bath room can easily add value to a property.

Investors who are able to add value to their property may also do so while enjoying the benefits of tax deductions – either outright in the year incurred or depreciated over a number of years (more about this later on the ongoing costs and tax effect chapters).

Value-adding can also increase the property's cash flow potential - for every $10 extra rental income you get you can usually add an extra $5,200 to the valuation of your property.  This extra equity may be all that is required to get you over the line for your next purchase.

Deciding how to add value to the property is the biggest hurdle and you do not want to over-capitalize on the investment or its capital growth potential.

The simplest rule to follow when value adding to your real estate investment is to keep it simple.

If the kitchen is old and run down and potential tenants are deterred by its state it's probably worthwhile investing in a kitchen renovation. This can be done simply; maybe all you need to do it replace the bench top, splash back and repaint.

Similarly, re-painting the main rooms of the house can be cheap (particularly if you are able to do it yourself) and it can make the house far more appealing to renters (and valuers). 

Every little bit counts when it comes to adding value to your real estate investment -- and it's usually little changes which come at low costs that are most worth your while.

The more equity you have as capital leverage when re-borrowing the better.

 

Do you want to know more? Click here to watch five free webinars on - ‘Proven, Must Know, Property Investment Advice’

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