Creating Positive Cashflow Properties -Anatomy of a makeover

Creating Positive Cashflow Properties -Anatomy of a makeover http: //www. themakeovergroup. com. au/

Why makeover a rental property? • Targeted spending can improve the overall investment return (both cashflow & capital value) • This reduces the shortfall between rent paid by the tenants and interest costs • Importantly, it improves an investors position to acquire their next property http: //www. themakeovergroup. com. au/

A case study Making over Hotham St, Ballarat http: //www. themakeovergroup. . com. au/

Background - Purchase price: $198 k - Existing rent: $160 per week (4. 2% yield) - Condition: Very poor, house appeared to be leaning, smoke stained walls and ceilings, old/stained carpets, brown wall paper and paneling. - Locale: 150 m to Lake Wendoree, 800 m to city, 500 m to hospitals http: //www. themakeovergroup. com. au/

The Makeover • Straighten front porch post (house wasn’t leaning at all!) • Paint internal and external • New floor coverings & light fittings • Update bathroom (cosmetic only) and kitchen (2 ndhand) • Simple landscaping & heaters in rooms Timeframe: two weeks (some work before settlement) Budget: $19, 000 http: //www. themakeovergroup. com. au/

Before and after photos After Before Secondhand kitchen Cost: $3, 400 installed Before After http: //www. themakeovergroup. com. au/

The Numbers Before After Rent $160 pw $245 pw Yield 4. 2% 5. 9% Value $198, 000 $260, 000 LVR 93% 74% Equity $14, 000 $57, 000 http: //www. themakeovergroup. com. au/

What the client said: “Making over Hotham St. completely changed how attractive the property was as an investment. Not only did we improve the yield by almost two percent, but we also added about $60, 000 of value – all for a $19, 000 investment. This meant our LVR was even stronger than it was before we bought the house, putting us in a stronger position for our next purchase with the bank. ” C. Kingston http: //www. themakeovergroup. com. au/

Risks for makeovers • Sourcing reliable tradespeople • Time blowouts (leading to lost rent) • Insufficient research/analysis • Cost blowouts (selective enhancements) • Structural integrity, unidentified works required • Asbestos http: //www. themakeovergroup. com. au/

Some of our other projects To find out more, contact Richard on 1300 768 949 http: //www. themakeovergroup. com. au/