How just $10,000 worth of our recommended improvement works resulted in a property increasing in capital value of $75,000 and rental return by over 10%.
We have managed an older style office/warehouse in Dandenong South for some time. It had a long history of tenure, however little opportunity for rental and capital growth as it was showing its age. The tenant had given notice to vacate with current rental significantly under market value.
Our Approach ➡
As the tenant had occupied the property for nine years, we advocated for the Landlord to make some improvements.
We took a simple approach of getting the highest return for the landlord and suggested the following works.
- -Repaint the internal offices
- -Replace the office floor coverings
- -Install new bathroom fixtures (toilet bowls, urinal & sinks)
The cost of improvement works was approximately $10,000 and resulted in a property with far better presentation for potential tenants.
Following the building improvement works, not only did the property lease to a quality tenant with only 30 days of vacancy, but to the Landlord’s delight at a rental rate 10.5% higher than the previous rental.
At a 6% yield on the previous rental, we estimated the market value of the property to be approximately $690,000. At the same yield based on the new rental we were able to show the Landlord that the property had increased to $765,000, a capital increase of over 10%.
Each property’s requirements are different and it can take an expert to identify key areas of improvement that will have the most impact.
Contact our expert Property Management team today to find out how we can advocate for you and maximise the value of your portfolio.