Keeping tenants happy means a steady flow of rental income, but how far is too far? Smart Property Investment’s editor Phil Tarrant gives insight to his methods for success.
Keeping a tenant for the long-term can mean a steady cashflow for potentially years to come, and doing so means responding to any requests they may have, but it cannot be at the cost of value to the property they are renting in, according to Mr Tarrant.
Speaking on the Property Investing Matters show, Mr Tarrant together with host Margaret Lomas answered a question from viewer Sue, who asked if she should add an additional outdoor living space to a property that backyard has been subdivided for two town houses, as her tenants have said they would like more outdoor living space.
For Mr Tarrant, this question carries too many unknown elements.
“There’s a number of different things here: Number one: are you going to keep the tenants happier and/or [improve] the rent as a result of doing this work?” he asked.
“Number two: are you actually [increasing] the capital value of the property by doing this work?
“Number three: how are you going to pay for doing this work; and number four: are you actually allowed to do the work, is the council going to allow you to do this type of work?”
Making an extra outdoor living space, Mr Tarrant said, would be a good idea but there needs to be more benefits for the property before proceeding with such an idea.
“You might struggle actually putting a fence up in the front of your house. It sounds [like] right now that it’s pretty tight and condensed, that you’ve done a subdivision, and you’ve got property behind you right now,” he said.
“So aesthetically, it might make the property feel really blocked in, it might block out light, it might make it feel a lot more sheltered.”
Steps before renovating
The first step, Mr Tarrant said, would be to ask the tenants themselves how they feel about the current situation, and work out if it genuinely impacts their decision to live in your property.
Then, he recommended speaking to the property manager of the property and ask them if going ahead with the renovation will be reason enough to increase rent.
“Potentially speak to their selling agents, ‘Is that going to influence the value of the property?’” he added.
“That’s value you might be able to use for other purposes.”
Ms Lomad said she did not think doing the renovation would add to the property value, but may add saleability as long as the aesthetics of the property are not compromised, and if it makes up for the lack of the backyard space.
“If you do put one on there, make sure it does come off a living area. You can’t just make a front yard off a bedroom that you’ve got to get to by coming out the front door, so it needs to have some kind of easy access so it looks quite seamless into a courtyard kind of a space,” she concluded.