1. Home
  2.  / Small Spend, Big Impact

Small Spend, Big Impact

An inexpensive makeover can really pay off for your apartment, writes Aaron Tunstall.

By: Aaron Tunstall

1 December 2015

One of the advantages of owning an apartment is the way you can carry out a major makeover on a relatively small budget.

Yet so few apartment owners make the most of this. Despite what some investors seem to think, there’s a world of difference between ‘low maintenance’ and ‘no maintenance’. If you have an apartment, it’s a fantastic low maintenance property investment.

But if you want to do absolutely no maintenance, put your money into a managed fund and ignore it for as long as you like.

If you’ve got an apartment that hasn’t been refurbished for several years, you could be missing out on:

  • Higher rents. A run-down apartment won’t easily command the top-of-the-market rent range.
  • Better tenants. Even if your refurbishment doesn’t increase the rent, it will make your apartment more desirable, giving you more choice among prospective tenants and letting you select a more responsible renter.
  • Longer tenancies. A smart-looking apartment makes your tenant feel well looked after and less likely to be seduced away by a newer apartment.
  • Reduced damage. As any experienced property manager will tell you, the better presented your property is, the more respectfully it tends to be treated.

With so many new apartment buildings coming on to the Auckland market in the next year or two, tenants are going to have greater choice. If you continue to ignore your rental apartment and let it grow increasingly shabby, you may find yourself struggling with either vacancies or, more likely, lower rents and lower quality tenants.

Of course, if you’re selling your apartment a makeover becomes an imperative. The returns are simply too good to ignore. In April this year, an apartment in the De Rohe building in Auckland was sold for $338,000; the rental appraisal at that time was $390 to $400 per week. It was purchased by one of our clients, who asked us to help him organise a spruce-up of the apartment. It wasn’t in terrible condition, but it was dingy-looking, with scruffy furniture and worn-out carpets. We could see immediately that tenants wouldn’t be fighting over the chance to live there.

Our client spent a total of around $13,000 on the makeover, including:

  • New carpet.
  • Repainting, including the ceiling.
  • New furniture.
  • Soft furnishings including rugs, throws, cushions and bed linen.
  • Two wardrobes to increase storage.
  • Office furniture and lamps.
  • Artwork for the walls and other home wares to make the apartment look more appealing.

It was money well spent – the apartment now looks fresh, clean and modern and we knew it would easily and quickly attract a great tenant. From our investor’s perspective, it was a chance for a quick cash injection. We resold the apartment for him in July (it settled in August) for $430,000, with a rental appraisal of $500 to $520 a week.

That’s a price increase of $92,000. Even after subtracting the cost of the makeover ($13,000) and the brief two-week window when it was vacant (lost rent of $800), plus sales fees, that’s a superb return after a mere four months. And this will keep paying dividends for the new owner. A $10,000 makeover every few years will put your apartment on the top of the pile and pay for itself in rent over that period.

Leave any investment property looking unloved and the tenants will treat it accordingly. Give it the right amount of well-chosen attention and you’ll find it repays you handsomely.

Aaron Tunstall is the general manager of award-winning Impression Real Estate, which specialises in property management and sales and manages over 1,750 Auckland apartments.

Advertisement

Related Articles