Browse Forums General Discussion 1 Mar 13, 2016 10:07 pm hello readers, I've recently purchased my first investment property. Please see attached link for reference http://www.realestate.com.au/property-h ... -122097630 I am looking to add some life into the place.. It is currently rented at a great return of $260 per week. I will live in their property for 2years max while I build on my block of land.. I am re carpeting the 3 bedrooms approx $1300 laid Ripping up the carpet in hallway and lounge (house has floorboard underneath) I am getting them repolished approx $1000 Re painting the whole place dulux snow season colour with white skirting boards and ceiling I'll repaint the kitchen and add a new sink and splash back The bathroom I've ordered a new vanity and toilet.. The open fire I'm fixing the tiles and painting the interior black My problems; What should I do with the ugly timber trim in the bathroom? Exterior I am ripping the whole garden out, and re-painting the Windows white .. But my problem is the outdated / ugly brickwork.. !! what can you recommend? .. Like all, I don't want to break the bank so that will rule rendering out.. I'm more after a diy home project .. I am aware there are certain brick paints on the market now.. Can anyone recommend a colour / type? Or any other ideas I should look into ?? any feedback / suggestions on anything I have said will be great.. Thanks in advance Re: My First Investment Property - Help Needed 2Mar 13, 2016 10:31 pm A friend of mine used the render type brick paints and it was aweful. My cousin painted her old brick house white with black window sill trims and it really made an impact. Re: My First Investment Property - Help Needed 3Mar 13, 2016 10:33 pm I personally like the wood in the bathroom. Think it could look nice with a contemporary toilet and basin. However, painting black might look pretty cool given the black and white flooring with white babe it. I'd also paint the front fence, and paint the bricks Re: My First Investment Property - Help Needed 4Mar 13, 2016 10:37 pm do you have a photo? Appreciate the reply thanks.. Beazley77 A friend of mine used the render type brick paints and it was aweful. My cousin painted her old brick house white with black window sill trims and it really made an impact. Re: My First Investment Property - Help Needed 5Mar 13, 2016 10:38 pm interesting.. Was thinking I would eventually change the tiles in the bathroom.. Maybe maybe not .. Yes forgot to mention the front fence.. Can't decide whether I stain it or pain it , If so what colour? White ? Beazley77 I personally like the wood in the bathroom. Think it could look nice with a contemporary toilet and basin. However, painting black might look pretty cool given the black and white flooring with white babe it. I'd also paint the front fence, and paint the bricks Re: My First Investment Property - Help Needed 6Mar 13, 2016 11:10 pm I also like the timber trim in the bathroom (wainscoting), it's a nice period feature. It does look nice painted white though (would probably be the only colour I would paint it). As far as the exterior bricks, I would leave them as is. Pale bricks tend to pass as neutral and painting will just create more maintenance and give the house a very generic look (imo it's actually the roof tiles that are dragging the look down). I also wouldn't paint the internal fireplace, just clean it up a bit, they're supposed to be a little soot stained . Instead I would think of using a contrasting colour for the actual tiles to make the fireplace stand out as a feature, the white tiles are very mehh. Oh, and definitely paint the fence pickets, that will make a huge difference, I would do it the same colour as you decide to do the window frames. Re: My First Investment Property - Help Needed 7Mar 14, 2016 12:33 am Hmmm If it were me, I would not be spending a whole heap on renovations as it is debatable how much return you are going to get out of the spend. If you need to renovate then it should be done while you are renting in-between tenants. Speak to your accountant as there is usually a maximum you can have the place not rented and still claim the nexus between rental income and repairs and maintenance. Assuming you paid 170K and your agent rental commission is 8.5% before rates, taxes, finances and depreciation you have about a 7.2% yield. I would find out exactly what is needed to have the work deductible. If it is an upgrade it will be a capital improvement and cannot be written off, must be depreciated. If the place is already rented then I think you have time up your sleeve. Weigh up the cost of doing everything and then weigh up the capital value increase and rental value increase. remember you cannot live off capital increase. When the house is rented switch the loan to an interest only if possible and have an offset account so that you have liquidity for the house you build. remember you get deductions for your rental house so you want your PPOR paid off as quick as possible. I would love to have that return and if it were me I would do what is required repairs and maintenance wise. Good luck. Re: My First Investment Property - Help Needed 8Mar 14, 2016 8:01 am Thanks for the feedback, very much appreciated.. Exactly the thoughts and ideas I need in regards to the fence out the front.. if I painted it white like the Windows do you think it would be to much? .. Just thinking a white fence might be a little to bright?? piscean I also like the timber trim in the bathroom (wainscoting), it's a nice period feature. It does look nice painted white though (would probably be the only colour I would paint it). As far as the exterior bricks, I would leave them as is. Pale bricks tend to pass as neutral and painting will just create more maintenance and give the house a very generic look (imo it's actually the roof tiles that are dragging the look down). I also wouldn't paint the internal fireplace, just clean it up a bit, they're supposed to be a little soot stained . Instead I would think of using a contrasting colour for the actual tiles to make the fireplace stand out as a feature, the white tiles are very mehh. Oh, and definitely paint the fence pickets, that will make a huge difference, I would do it the same colour as you decide to do the window frames. Re: My First Investment Property - Help Needed 9Mar 14, 2016 8:05 am Thanks for the feedback.. I have a 60 days settlement then will be living in the house for max 2 years.. hence why I will do a few repairs and neaten it up abit (paint, carpet etc) sorry I'm a little raw to this all, so if I was to live in it from the outset, I'm guessing the below becomes irrelevant ? Any other options ? AussieMark Hmmm If it were me, I would not be spending a whole heap on renovations as it is debatable how much return you are going to get out of the spend. If you need to renovate then it should be done while you are renting in-between tenants. Speak to your accountant as there is usually a maximum you can have the place not rented and still claim the nexus between rental income and repairs and maintenance. Assuming you paid 170K and your agent rental commission is 8.5% before rates, taxes, finances and depreciation you have about a 7.2% yield. I would find out exactly what is needed to have the work deductible. If it is an upgrade it will be a capital improvement and cannot be written off, must be depreciated. If the place is already rented then I think you have time up your sleeve. Weigh up the cost of doing everything and then weigh up the capital value increase and rental value increase. remember you cannot live off capital increase. When the house is rented switch the loan to an interest only if possible and have an offset account so that you have liquidity for the house you build. remember you get deductions for your rental house so you want your PPOR paid off as quick as possible. I would love to have that return and if it were me I would do what is required repairs and maintenance wise. Good luck. Re: My First Investment Property - Help Needed 10Mar 14, 2016 10:16 am I also have a rental property.
As AussieMark says, while you are living in it you can't claim the cost of improvements as a tax deduction unless it it part of it being rented out. You won't be able to claim the interest as a deduction either. If it is positively geared this might not be an issue for you, but if it is negatively geared it may I would leave the upgrade until you are about to rent it out (i.e. when it is no longer your primary place of residence). I would leave the brick work as is. Brick work is low maintenance and as long as it looks neat and tidy your tenants won't care. Painted brick work ends up looking tacky. And could reduce the resale value. Paint the trim and fence white. Paint the woodwork in the bathroom white if you really can't stand it and if you are sure it will increase the rental. But if you can stand it for two years, wait until you are getting it ready for tenants. Especially if you are paying others to do this work. If this is your first house, there is a danger that you will treat it like your home and not an investment. You should only be putting money into things that will keep the house rentable and maintained. Re: My First Investment Property - Help Needed 11Mar 14, 2016 10:52 am Good points Joynz. Just bar in mind that if you repair before you rent get advice from an accountant. There may not be an association between future rent and past expense. With that yield I would grin and bare it for the two years and then get a better return. Remember its an investment. Re: My First Investment Property - Help Needed 12Mar 14, 2016 7:34 pm thanks for the feedback and ideas !! i dont know much about the investment side in terms of claiming etc.. hence why a accountant would be ideal to visit.. but i cant wait until its rented before doing some work.. for example the carpet and floorboards polishing i will do before i even move in.. as well as the painting.. ... the painting i will do myself.. going by the feedback by alll i will leave the brickwork do you think painting the front fence white will be to bright?? like to white haha?/ also i would paint the timber windows white.. what else do you think? the timber in front of the front door / decking? .. gutters maybe?/? Joynz I also have a rental property. As AussieMark says, while you are living in it you can't claim the cost of improvements as a tax deduction unless it it part of it being rented out. You won't be able to claim the interest as a deduction either. If it is positively geared this might not be an issue for you, but if it is negatively geared it may I would leave the upgrade until you are about to rent it out (i.e. when it is no longer your primary place of residence). I would leave the brick work as is. Brick work is low maintenance and as long as it looks neat and tidy your tenants won't care. Painted brick work ends up looking tacky. And could reduce the resale value. Paint the trim and fence white. Paint the woodwork in the bathroom white if you really can't stand it and if you are sure it will increase the rental. But if you can stand it for two years, wait until you are getting it ready for tenants. Especially if you are paying others to do this work. If this is your first house, there is a danger that you will treat it like your home and not an investment. You should only be putting money into things that will keep the house rentable and maintained. Re: My First Investment Property - Help Needed 13Mar 14, 2016 7:35 pm thanks for the response.. yes thats the hard part haha, but the carpet and floorbaord i will do before i am in it.. and the painting i will do myself.. other bits and pieces along the way i guess.. but if i do it for all under 5k would that still be good??? AussieMark Good points Joynz. Just bar in mind that if you repair before you rent get advice from an accountant. There may not be an association between future rent and past expense. With that yield I would grin and bare it for the two years and then get a better return. Remember its an investment. Re: My First Investment Property - Help Needed 14Mar 14, 2016 8:06 pm As i have done with mine was when i was living it it pay it off quicker and dont spend any money on it until you are ready to sign a rental agreement. then use the redraw on the loan to do the improvements. and change to interest only loan. Re: My First Investment Property - Help Needed 15Mar 14, 2016 8:29 pm I would be paint the wood in the bathroom white, I'm not to fond of the wooden look myself. I also would leave the bricks alone, I don't think its that bad. I would paint the fence white and give the front porch etc a nice coat of paint also. I wouldn't do much more than your planning leaving out the bricks outside, it sounds like you will only spend about $4,000 if that going off your figures. To be honest, $4,000 for 2 years of living in a nicer house would be worth it. Also you will increase the value of your property likely and save on future CGT as you will have the house valued when you move out, so your pay CGT on the property increase from then, not when you brought it, so you kinda make money there. ~Shellby~ GJ Bridgewater 203 11/3/2016 - Site Work Started 29/9/2016 - Handover 142 Work Days 6 Work Days Over https://forum.homeone.com.au/viewtopic.php?f=31&t=80174 Re: My First Investment Property - Help Needed 16Mar 14, 2016 8:35 pm this may sound stupid, but why change to interest only on the loan.. Wouldn't you rather pay it off? Then the rental return would be an income not still paying off a mortgage? GSP07R As i have done with mine was when i was living it it pay it off quicker and dont spend any money on it until you are ready to sign a rental agreement. then use the redraw on the loan to do the improvements. and change to interest only loan. Re: My First Investment Property - Help Needed 17Mar 14, 2016 8:37 pm Thanks for your response I have decided I will not touch the brickwork.. I will pain the wood in the bathroom white Everyone has said front fence white , so I will do that also, do you think timber on porch white ? Or how would you do that..? Yeah it will defiantly be under 5000 that's for sure.. Around 3000-4000 will get me through shellby I would be paint the wood in the bathroom white, I'm not to fond of the wooden look myself. I also would leave the bricks alone, I don't think its that bad. I would paint the fence white and give the front porch etc a nice coat of paint also. I wouldn't do much more than your planning leaving out the bricks outside, it sounds like you will only spend about $4,000 if that going off your figures. To be honest, $4,000 for 2 years of living in a nicer house would be worth it. Also you will increase the value of your property likely and save on future CGT as you will have the house valued when you move out, so your pay CGT on the property increase from then, not when you brought it, so you kinda make money there. Re: My First Investment Property - Help Needed 18Mar 14, 2016 9:26 pm Is that what houses sell down there? Re: My First Investment Property - Help Needed 19Mar 14, 2016 9:43 pm " if I painted it white like the Windows do you think it would be to much? .. Just thinking a white fence might be a little to bright??" Here in perth I don't like white trim externally since the light levels over here can be a bit blinding, and to me white is too glaring over here but I think white will be fine in vic. Keep it simple. Right now the fence is just dark and dowdy (almost depressing) so painting it white will really lift the appearance of the house. I also notice in your loungeroom it looks like you have quad and scotia over the carpet? To save money, pull up the carpet yourself. The carpet looks very old so you may not have tackstrips underneath, and I know in my house, the quad was basically covering up the staples and carpet tacks around the rooms (no tackstrips). If that's the case, all those staples and tacks will need to be pulled out. The reason I mention it, is that it's unusual to have quad/scotia over carpet so there may be a reason it is there. Re: My First Investment Property - Help Needed 20Mar 14, 2016 10:09 pm Buddyhawks23 this may sound stupid, but why change to interest only on the loan.. Wouldn't you rather pay it off? Then the rental return would be an income not still paying off a mortgage? GSP07R As i have done with mine was when i was living it it pay it off quicker and dont spend any money on it until you are ready to sign a rental agreement. then use the redraw on the loan to do the improvements. and change to interest only loan. If you are investing and intend turning the property around quickly, then an interest only loan is the least amount of expenditure - if you sell for a profit before the interest only period ends. And you can still claim the interest as a deduction. Also frees up money for other things temporarily. My loan is interest only, for a term of four years then reverts to market rates. However, the capital gain won't be enough for me to want to sell at the end of that period, so I am actually paying extra and keeping that money in an offset. This means that when the rate changes to interest and principal in a couple of years, I will be used to the extra repayments and have a fair amount saved. I suggest having a chat to an accountant. You might be able to apply to divert the sewer at your expense. 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