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Creating Positive Cashflow Properties -Anatomy of a makeover

Creating Positive Cashflow Properties -Anatomy of a makeover. http://www.themakeovergroup.com.au/. Why makeover a rental property? Targeted spending can improve the overall investment return (both cashflow & capital value)

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Creating Positive Cashflow Properties -Anatomy of a makeover

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  1. Creating Positive Cashflow Properties -Anatomy of a makeover http://www.themakeovergroup.com.au/

  2. 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 http://www.themakeovergroup.com.au/

  3. A case study Making over Hotham St, Ballarat http://www.themakeovergroup..com.au/

  4. 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 http://www.themakeovergroup. com.au/

  5. 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 http://www.themakeovergroup. com.au/

  6. After Before Before After Before and after photos Secondhand kitchen Cost: $3,400 installed http://www.themakeovergroup.com.au/

  7. The Numbers BeforeAfter Rent $160 pw $245 pw Yield 4.2% 5.9% Value $198,000 $260,000 LVR 93% 74% Equity $14,000 $57,000 http://www.themakeovergroup. com.au/

  8. 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 http://www.themakeovergroup. com.au/

  9. 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 http://www.themakeovergroup. com.au/

  10. To find out more, contact Richard on 1300 768 949 Some of our other projects http://www.themakeovergroup. com.au/

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