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Increase Rental Income and Deductions

Australia’s renovations industry appears to be profiting from weaker economic conditions and tighter lending standards, with alterations and additions to residential buildings hitting a historic high recently.

Australian Bureau of Statistics December Building Activity data showed a 6.6 per cent increase in alterations and additions in 2018, with renovation spending reaching $2.27 billion in the December quarter.

This indicates homeowners and investors seeking to improve capital values and increase rental income have been renovating their properties, rather than purchasing anew.

It’s expected this boom will continue, as Master Builders Australia has forecast homeowners and investors will spend $8.8 billion annually on renovations over the next five years.

Renovations can significantly increase rental income. According to the first CoreLogic Quarterly Rental Review for 2019, gross rental yields are currently around 4 per cent. However, in some scenarios, renovators can achieve a 13 per cent return on their renovation investment.

Renovation case study to increase rental income

Let’s look at a case study where an investor completed a $60,000 renovation.

Here is the investor’s scenario before and after completing the renovation.

  • Original purchase price (before renovation) = $410,000
  • Rental income per annum prior to renovation = $18,720
  • Total renovation spend (completed in 2018) = $60,000
  • Property value on completion = $565,000
  • Rental income per annum after renovation = $26,520

In 2018 kitchen, bathroom and other cosmetic renovations were made. Newly installed plant and equipment assets included an oven, cooktop, dishwasher, rangehood, carpet, blinds, lights and a split-system air conditioner. The investor also installed fixed and structural items such as kitchen cabinets, benchtops, a bath, toilet and tiles.

A post-renovation valuation found the property was now worth $565,000. A property manager’s rental appraisal also found the owner could earn $510 per week.

Below is the investor’s tax scenario before and after the renovation.

Depreciation scenario before and after $60,000 renovation Graph

Source: https://www.bmtqs.com.au/maverick/mav-46-renovations-increase-rental-income-and-deductions

Prior to the renovation, the investor was experiencing an annual cash loss of $1,207.

However, after renovations their weekly rental income increased by $150, achieving 13 per cent yield on the renovation cost. They also turned their annual cash loss into a positive cash flow of $4,054, an additional $5,261.

Renovation tips and traps

While this example shows the great results possible, it’s important to be aware of some tips and traps before committing to a renovation project.

Scrapping can increase deductions when renovating

As part of any renovation, old assets will be discarded and new assets will be installed. When removing structures or assets from an investment property, existing assets may have a residual depreciable value. A process known as scrapping should be applied to ensure undeducted entitlements are claimed.

Asset selection when renovating affects depreciation deductions

Choosing which assets to install can also make a difference to what can be claimed once a renovation has been completed.

Items that serve similar purposes, such as flooring, depreciate at different rates. Carpet installation with a $2,000 cost will result in $500 in depreciation deductions in the first full year compared with floating floorboards and tiles of the same cost, which result in $267 and $50 in deductions respectively.

Avoid overcapitalising when renovating

Investors should stick to a budget when selecting items as it’s easy to overcapitalise. This is particularly relevant in today’s property market, where according to CoreLogic dwelling values fell by 7.4 per cent from their peak in October 2017 to the end of March 2019.

As many capital cities have experienced price declines, investors need to be wary of recouping the dollars spent during a renovation, particularly if they are planning the work to help sell their property at a higher value or raise the cost of rent to increase rental income. Sticking to a budget is crucial.

Seek advice prior to starting work, particularly if living in the property while renovating

A specialist Quantity Surveyor can provide advice on potential deductions available including whether depreciation legislation changes passed in November 2017 have any impact on your personal situation.

If you’re living in a residential property whilst completing a renovation, work completed can impact future deductions should you rent the property later. Newly installed plant and equipment will be considered previously used if items are added to a residential property while living there. BMT data shows one in four people lived in their property before renting it out in FY 2018/19.

There are exceptions. Substantially renovated properties and capital improvements to fixed and structural items aren’t affected. Even if fixed and structural improvements were completed by a previous owner, a new owner can still claim these items in the future.

Source: https://www.bmtqs.com.au/maverick/mav-46-renovations-increase-rental-income-and-deductions

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Routine Inspection Guide

We will conduct a routine inspection at the property within the first 3 months of an initial lease commencing. If we are satisfied with the standard of the property, we will schedule 3-6 monthly inspections as necessary.

The purpose of a routine inspection is to provide a report to the owner that the residents are maintaining the property in good order, and also to check for any repairs that may be necessary. Please note, however, that it is the responsibility of a lease holder to report any repairs or maintenance through our on-line resident portal. We appreciate you taking the time to report such items!

Another reason for conducting routine inspections is to make any recommendations to the owner that will enhance the property where possible, thereby offering a safe and inviting home for our residents.

So let’s get to it!

What we look at inside

  • Walls / light switches / skirting boards /doorways and doors are clean from marks
  • Ceilings are free of mould
  • Carpets are stain free
  • Windows and screens are clean
  • Light fittings and ceiling fans are clean and free of dust and light bulbs are working
  • Kitchen are is clean and the oven / stove top is free of burnt on food and stains
  • Shower, Bathroom and toilet are clean, particularly, shower tiles, shower glass screens and door free of scum build up

What We look at outside

  • The lawns are cut and edged
  • Gardens are tidy, weeds removed, hedges trimmed to a reasonable height
  • Rubbish / lawn clippings removed
  • Oil stains removed from carports, garages and driveways
  • Swimming pool / spa – water and sides / bottom clean not GREEN

If you have an approved pet

  • Any droppings are picked up and removed
  • Any pet damage is repaired
  • Ensure your dog/s are properly restrained for the inspection please

 

Thank you for helping us to maintain the property and your home to the best that it can be.

Please let us know if you would like some further information on cleaning tips or ECO friendly products that are available now.

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New Year Annual Home Maintenance Checklist

Monthly

  • Inspect, and possibly change out home vacuum filters. Many experts will say to change the filters monthly, but that’s not always necessary. For smaller families without pets or allergies, you’ll likely be okay changing the filters every 2-3 months. If the filter is dirty, change it out, otherwise inspect it again next month.
  • Clean kitchen sink disposal. There are a number of ways to do this, but the handiest and best all-around solution seems to be vinegar ice cubes. Put some vinegar in an ice tray and let it freeze, then run the ice cubes through the disposal. It freshens it, but as a bonus, ice sharpens the blades. You’re welcome.
  • Clean range hood filters. If you’ve never thought of doing this, you’re in for a real “treat” when you get that filter off the hood to clean it for the first time. Simply use hot soapy water, let the filter sit for a few minutes, rinse it off, and you’re good to go.
  • Inspect your fire extinguisher(s). We’ll assume you have and know how to use an extinguisher. This inspection doesn’t require much: ensure it has easy access (not being blocked by a garbage can or anything else), that the gauge shows adequate pressure, and that it has no visible signs of wear and tear.
  • Pool cleaning and maintenance. Pools can be costly if not cared for properly. Please ensure cleaning is done regularly and water tests are conducted to ensure the PH levels are correct. Stay on top of your pool checks to enjoy your pool year round!

Quarterly

  • Test smoke detectors. Another simple task; your detectors should have a “test” button. If the alarm sounds, you’re good to go. If not, replace batteries immediately and test again. If it still doesn’t sound, it’s possible there’s simply corrosion on the battery terminal, and it won’t detect new batteries. Please contact our office immediately.
  • Test garage door auto-reverse feature. Test every month by placing a 2×4 on the ground where the door would close. It should reverse after a second or so when the door hits the wood. Also test the photo-electric sensors if you have them by placing something in front of them (not your body). If the door doesn’t immediately go back up, you have a problem.
  • Run water and flush toilets in unused spaces. This mostly applies to guest bathrooms, or any other sinks/water sources you don’t use on a regular basis. The idea is to prevent grime or any other kind of build up. Regularly running a little bit of water through will prevent this.

Biannually

  • Give your house a deep clean. Take one Saturday every six months with your whole family, and give the whole house a proper deep clean. Appliances, windows, dusting every nook and cranny etc. Keeping things clean and not letting dirt/grime/dust build up over years and years will help keep your home in tip-top shape.
  • Vacuum your refrigerator coils. The fridge can use up to 15 percent of your home’s total power, so you want it running as efficiently as possible. Over time, the coils get dirty and your fridge requires more juice. You can save up to $100 a year by doing this, and it’s not at all a difficult task.

This information was sourced from: https://www.artofmanliness.com/articles/keep-your-house-in-tip-top-shape-an-incredibly-handy-home-maintenance-checklist/

Visit their site for more handy tips!

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National Water Week

National Water Week is popping up again in the third week of October. The theme for 2018 is ‘Water for me, Water for all’, and is aimed at encouraging young people and the wider community to think about how we use water on a day-to-day basis and how we can protect it so we have it in the future.

Water usage is a particularly topical conversation in Australia, and more specifically, in Queensland at the moment, where drought is plaguing our shires. Currently 58.1% of the state is a drought-declared shire. Additionally, with a drier-than-average spring approaching, it is become more and more vital that we save water in all ways that we can.

We have compiled some tips from the Queensland Government Water Initiative to help you save water in your own home…

Bathroom

Up to 16 per cent of household water is flushed down the toilet. The following tips can reduce the amount of water used and in turn help reduce your water bills.

  • Don’t flush needlessly. Use the half-flush option on dual flush systems and never flush items other than toilet paper down the toilet.
  • Replace your older-style toilet suite with a 4-star WELS Scheme dual-flush system. This can save up to 8 litres of water with every flush.
  • Use tank water to flush. Talk to your plumber about having your rainwater tank internally plumbed to your toilet.

 

A standard shower can use 20 litres of water per minute, and accounts for up to 24 per cent of household water use.

  • Install a water-efficient shower head. A WELS Scheme 3-star rated shower head will use no more than 9 litres of water per minute.
  • Take a shorter shower. Shorter showers not only save water but help reduce the amount of energy associated with heating the water.
  • Insulate your hot water pipes. This means you won’t need to wait as long for the hot water to flow through—saving you both water and energy.
  • Make sure your hot water system thermostat is not set too high.
  • Use a bucket to catch water while the shower warms up. You can then reuse this water on your garden.

Laundry

Selecting the right washing machine is the best way to save water and energy. Choose a washing machine with a 4-star WELS Scheme rating or better; you could use up to 50 per cent less water.

  • There are a number of other ways you can save water in the laundry.
  • Try not to use your washing machine every day. Instead, sort clothes and wash bigger loads less frequently.
  • Pre-treat stains to limit the need to rewash.
  • When adjusting warm water tap flow, always turn the hot water down rather than the cold water up.
  • Use small amounts of water if washing clothes by hand and reuse this water in your garden.
  • Make sure that everyone picks up and sorts the clothes they wear each day so clean clothes don’t get washed by mistake.
  • Divert grey water from your washing machine for immediate use on your garden (except vegetables).

 

Kitchen

Water use in the kitchen contributes up to 13 per cent of total household consumption. There are many ways to save water in the kitchen.

  • Use the dishwasher with a full load. Running a full load in a water-efficient dishwasher uses less water than washing dishes by hand.
  • A 5-star WELS Scheme rated water efficient dishwasher uses as little as 7 litres of water.
  • Scrape your dishes and soak your pots and pans to remove food rather than rinsing them under running water.
  • If you have two sinks, half-fill the second sink with rinsing water. If you only have one sink, rinse the washed dishes in a pan of water.
  • Rinse vegetables in a bowl and then use the water on your garden.
  • Don’t use running water to defrost food. Place your frozen food in the fridge to thaw overnight.
  • Store drinking-water in the fridge—running the tap until it’s cool wastes up to 15 litres a minute.
  • Encourage children to empty water bottles onto the garden or pot plants instead of down the sink.

 

Pool

As pool and spa owners, you can reduce water consumption in several ways.

  • Use a pool cover. A properly fitted pool cover can stop up to 97 per cent of evaporation and reduce the amount of chemicals required to treat the water.
  • Check your pool for leaks. A tiny leak could result in a large amount of water loss.
  • Build your pool in an area that is shaded during the hottest parts of the day. This will reduce evaporation and help avoid the sun’s harsh rays while you swim.
  • Maintain the correct chemical balance in your pool and clean it regularly. Top up your pool with rainwater runoff.

 

For more great tips visit: https://www.qld.gov.au/environment/water/use/home.

 

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Spring Sales Season! Are You Ready?

It’s spring. The sun is shining, the flowers are in bloom, the birds are chirping, the grass is green, and you are feeling considerably more cheerful as the cold months have come to an end. With the bloom of the jacarandas comes a reinvigoration in the property market for those on a house hunt. Not only does spring give you a great excuse to declutter and commence a spring clean, but it also provides the perfect environment for an open home.

If you are considering selling your property this spring and wondering how you should prepare your home to sell in the property sales boom, we’ve compiled some useful tips to ensure you’re ready!

Bedside table due for decluttering

Declutter

Probably the easiest and cheapest alteration you could make to your home is to declutter it.
Reducing the number of personal items filling your home not only allows for a cleaner feel but it also allows visitors to envisage themselves living in the property, not to mention the wonders it does for your closet and cupboard space!

 

 

Image of owner cleaning kitchen floor with mop

Embrace the spring clean

Ensure your windows and mirrors are sparkling, wash the curtains and blinds, have your carpets professionally cleaned, polish tap fittings, hardwood floors and door knobs, rake the lawn and trim the bushes. Attention to detail is vital in making your home look its best (and only requires a bit of one-on-one time with the dustpan and brush)!

Image of flower on the bed side table

Set your home apart from the rest

The finer details might not be glaringly obvious to a buyer; however, these small touches are a cost-effective way of setting your home above other options on the market.

Set out fresh flowers or freshly clipped lilac branches, integrate towels, throws and pillows in complementary colours throughout your house, offer an outside mat for guests to clean their shoes, fill the sink with ice to chill bottled water for visitors or set out individually wrapped treats in cellophane or ribbon. Each of these small gestures are not only cost-effective but will ensure your guests feel at ease in your home.

Use a Real Estate Agent

 

As buyers and sellers spring into action, the property sales race is likely to be very tight. Utilising a real estate agent will help you to be at the front of the pack. At Arrive we have an amazing team of professionals ready to value your house, suggest a niche method of marketing tailored to perfectly suit you and you home, and to offer you a suite of services to mold your house into an irresistible property.

If you are interested in finding out more on how to sell your home this spring, please feel free to contact us at Arrive. We have a number of professionals with a wealth of skills and knowledge, ready to help you in your sales journey!

Contact

Arrive Team: 3374 3737

Trent Ray – Sales Agent: trent@arrivehome.com.au

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How to Paint over a Patched Wall

Painting over a wall patch so it looks invisible isn’t easy—ask anyone who’s tried it. It needs to be done carefully in order to look good.

As a property manager or landlords, we have all seen this too often:

    1. Paint ripped off when tenants are trying to remove double sided tape wall hooks
    2. Doorknob smashing hole in the wall.
    3. Cracked Walls
    4. Nail Holes

Can you repair this by just painting over the spot? Well, it depends. Will anyone ever looks at it? Sorry, but it will be painfully obvious what you did. So this depends on how critical the observer is. If I was your landlord and I saw a poorly done patch when you were moving out, I’d mutter a few obscenities under my breath, then quietly mention to you about how you just forfeited your bond unless you have it fixed.

The problem is that paint won’t match that well. The colour difference will be obvious. Plus, due to the hole in the surface, there will be small shadows that will be quite obvious, so you will need to fill in the surface so it is smooth, BEFORE painting. Anyway, if you tried to paint in just that small area with a brush, one would easily see the texture differences from painting with a brush compared to what was an original roller applied paint surface.

However, maintaining the rich colour and smooth finish of your home’s interior doesn’t mean you have to repaint the whole room to fix the dents, dings, scratches and marks that can, over time, mar your walls’ surfaces.

By using the proper technique and the right colour, you can touch up select spots of your wall paint, and keep your walls looking flawless and freshly painted again.  however, in most cases, it’s easier just to repaint the entire wall.

How Nice Would it Be to Work With Us?

Paul De Groot
Project Manager
Premiere Painters & Contractors Group
M:0438 783 739
www.premierepainters.com.au
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Storm Season Is Approaching… Is Your Home Storm Ready?

With Storm Season approaching, we have compiled some tips to ensure you and your home stay safe
this summer.

Gutters

During storm season in Brisbane, clogged gutters are some of the most common culprits of damage to
property. Ensuring your gutters are clear of debris is a key factor in safeguarding your house.

  • Full gutters can cause drainage problems resulting in an overflow of water escaping onto your property; and eventually can cause the gutter to fall off due to the weight of the water.
  • Full gutters can also cause the water to become stagnant creating the perfect breeding ground
    for mosquito larvae to hatch. Stagnant water can also cause an unwanted odor.
  • Water pooling can also cause your gutters to prematurely rust.

If you believe that your gutters might be blocked, please email : repairs@arrivehome.com.au so that
we can potentially arrange for this to be attended to.PLEASE NOTE: Please do not climb on ladders to assess the gutters

Overhanging Trees

If you have any trees on your property (even ones that don’t directly hang over your home), ask yourself these questions:

  • Does it appear that the branches need to be pruned?
  • Is there a large amount of deadwood on these trees?
  • Do any trees appear to be unstable?

OR

  •  Are there any trees/branches growing into POWER LINES?
    If you answered yes to any of these questions, please CONTACT repairs@arrivehome.com.au so that
    we can have a professional address the issues, ensuring you and your family stay safe this summer.

Important Updates and Contact Numbers

It is very useful to keep a list of emergency contacts, including the SES and Energex, in the case of a
fallen powerline or power outage. The Bureau of Meteorology also has great updates on any weather
patterns that could affect you, visit bom.com.au

SES: 132 500
Energex: 13 62 62

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Options for Financing A Granny Flat

Whether it be to provide housing for your family, or as an investment to earn rental income, granny flats are growing in popularity.

If you are considering this as an option, there are two common ways to arrange the money you need: accessing the equity in your property or taking out a construction loan.

Using Equity

The simplest way to secure funds for your new granny flat is using equity in your current home. It’s relatively easy to arrange a home loan to build a granny flat if you have enough equity in your existing property and you have sufficient income to support the new loan.

Using a Construction Loan

If you don’t have enough equity in your property, another option is to take out a construction loan. Construction loans are usually approved based on the value of the existing property plus the value of the granny flat build contract.

Before you begin it’s important to check with your local council to make sure you are working within the right parameters and regulations, including the rules around using a granny flat as an investment.

As the cost of a granny flat could range from $50,000 to more than $250,000, your first step should be to arrange an obligation free consultation to go through your finance options.

 

-Victor Larder, Astute Financial
Astute Financial Management Pty Ltd | ABN 59 093 587 010 | Australian Credit Licence Number 364253. AIW Dealer Services Pty Ltd | ABN 59 153 322 420 | Australian Financial Services Licence Number 414256

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