Investing in property is an excellent way to build long-term wealth and secure a stable source of passive income. However, you might not realise that undertaking capital investments not only significantly enhances the value of your investment but can also increase your rental yield.
Capital investments are funds spent on improving or maintaining your physical property or infrastructure. These can include renovations, extensions, or repairs that enhance your property’s value, quality, or functionality. When done right, capital investments can attract good quality tenants who don’t mind paying extra rent for a premium property.
So, if you already have an investment property or thinking about purchasing one, consider these options to help make your investment more profitable in the long run.
Renovations and Upgrades: One of the most effective ways to increase the value of your property is through renovations and upgrades. You can consider small cosmetic changes like repainting or adding new light fixtures, or larger projects like remodelling the kitchen or bathroom. Renovations can attract higher-quality tenants who are willing to pay a premium for a well-maintained property.
Properties with updated bathrooms, kitchens, and modern fittings are highly sought after by renters. Additionally, updated features can increase the property’s appeal to potential buyers while increasing its resale value.
We spoke to Patrick Gluyas from Smallacombe Building Group who explains how renovations and extensions can improve an investment property’s value. “Not only will renovating rooms such as the kitchen and bathroom improve your property’s appeal to prospective tenants, but it will also give maximum return on your investment. Considering the removal of walls in these areas opens up more flexible floor plans to work with.”
Energy Efficiency Upgrades: Upgrades that make your property more energy efficient can be a cost-effective way to improve its value and save money in the long run.
Consider adding insulation, replacing windows with double-glazed windows, and installing energy-efficient lighting and appliances. These upgrades can lower utility bills and increase the property’s appeal to potential renters.
Installing solar panels is one of the most effective ways to improve the energy efficiency of your investment property. Solar panels increase your property’s appeal to environmentally conscious renters looking for energy-efficient properties. Investing in solar panels is an excellent long-term investment that can significantly increase your property’s value as more and more buyers prioritise energy efficiency and sustainability when looking for a property.
John Paget from Go Sunny Solar believes investing in solar is a must for property owners. “Solar is a no-brainer for investors. You’re creating more equity, there are tax advantages, there’s no risk, your rental will be more attractive, and with an ‘anytime’ plan, you know the cost of your solar upfront and can factor it into the rent so that it effectively costs you nothing.”
Landscaping and Outdoor Spaces: South Australia’s temperate climate means outdoor spaces are highly valued by renters and buyers alike. Investing in landscaping and outdoor spaces like decks, patios, or pergolas can increase the property’s value and appeal.
Well-maintained outdoor areas can also attract high-quality tenants who are willing to pay a premium for the added amenities. Additionally, outdoor spaces can improve the property’s curb appeal, making it more attractive to potential buyers.
Maintenance and Repairs: Regular maintenance and repairs can also improve your property’s value. A well-maintained property can attract higher-quality tenants who will likely stay longer and treat your property respectfully.
Our harsh weather conditions like strong winds, hail, heavy rain, and stifling heat can cause significant damage to properties. Investing in repairs and maintenance can help prevent damage and prolong the life of your property while avoiding costly repairs down the track, which can eat into your rental yield and overall profit.
Over time, flooring can also become damaged or worn out, especially in high-traffic areas. Regular maintenance can help extend the life of your flooring; however, repairs or replacements may be necessary. Renters highly value properties with polished concrete or hardwood floors, so addressing any issues like water damage or moisture is essential. This can cause significant damage to the flooring and even lead to health hazards like mould.
Security and Safety: Investing in security and safety features can also improve the value of your property. South Australia has some of the lowest crime rates in the country, but investing in security measures can provide peace of mind to you and your tenants.
Security measures like deadbolts, security screens, and alarm systems can also reduce the likelihood of theft or damage to the property, increasing the overall value of your investment.
Capital investments can significantly improve the value of your investment property. By making these investments, you can increase your rental yield, attract high-quality tenants, and ultimately improve the overall value of your investment.
At the end of the day, an investment property is what it implies: an investment. And like any investor, you’ll likely be looking for capital growth over time while getting the best possible return in the process.
The professional Property Management team at McGrath Real Estate can advise you on what capital investments may be necessary to make your property more attractive to tenants, increase the property’s value, and realise a higher rental income.
Phone our office on 8350 4200, or drop into 42 Brighton Road, Glenelg.