Creating Positive Cashflow Properties -Anatomy of a makeover

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

A case study Making over Hotham St, Ballarat

Background - Purchase price: $198k - 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, 800m to city, 500m to hospitals 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 (2ndhand) Simple landscaping & heaters in rooms Timeframe: two weeks (some work before settlement) Budget: $19,000 com.au/

Before and after photos Before After Before After Secondhand kitchen Cost: $3,400 installed

The Numbers BeforeAfter Rent$160 pw$245 pw Yield4.2%5.9% Value$198,000$260,000 LVR93%74% Equity$14,000$57,000 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 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 com.au/

Some of our other projects com.au/ To find out more, contact Richard on