Driving down Princes Highway towards the city, I am always commenting on the resemblance the old apartment buildings in places like Malvern and Armadale have to the apartments I look after in Dandenong.
Inevitably, I am jumping online, map searching what’s FOR RENT in these areas and thinking, WOW!
How long before our apartments in Potter St, Hemmings St, etc look like this….
The stereotype apartment in an old building in Dandenong is run down with fixtures and fittings as old as the apartment itself.
They fetch between $235 – $250 per week in rent and are a vacant approx. 17 days between tenancies.
Many apartments are positively geared, with the rent servicing the mortgage and most if not all of the outgoings (yes, even despite the low rental range)!
While this accommodation business may not be hurting the investors’ back pocket today, it is in a STALE state, facing an inevitable downturn.
I’ll explain….
You see, the poor condition of the apartment means tenant selection is very much hit and miss, with your odds of a great tenant around 20-80.
Owners feel disheartened by the stress a crappy tenancy brings and usually after 2 such tenancies give up and put the property on the market.
The upside is they’ve decided to move on….
The BAD is that profits made, relative to the time spent in the market are miserable.
So…
What’s the alternative?
Keeping your property in top nick, changes the above outcome, MASSIVELY.
I am starting to see more renovations, in a range of budgets.
Making some changes, even very small like ensuring the property is beyond the “reasonably clean” state in which the tenant is required to leave it makes a difference!
Yes, this means you’ll need to arrange a TOP-UP clean and maintenance check between tenants to make sure all is in order.
REMEMBER, it is your investment!
Obviously, bigger works like a paint job, new flooring or going all out with a kitchen and bathroom update takes it to another level.
First, your open home now resembles the open home in Malvern with 20 people attending and competing for your place.
And your odds with a tenant are 90-10 in your favor. That’s pretty good right!
The rent is looking better too, at $270 – $280 per week.
And if you do find a better place for your money, you are seeing approx.10-15% higher sale prices.
I have no doubt that apartments in Dandenong will be like those closer to town and those of us who see value in staying in these markets for the long haul, will have a decent income stream in retirement without the back pocket pain of funding the investment along the way.
If you would like a chat about your investment in Dandenong, feel free to contact me directly on 0409572893.
