The crucial difference between renovations and maintenance
If you own a car, you’ll be familiar with the terms repair and maintenance from a routine trip to the mechanic.
You might have had a service inspection pick up a squeaky brake, uneven tyre wear or the need for an oil change – and while it’s never a nice surprise or bill to pay, you know that it’s vital for the value and longevity of your vehicle.
In real estate, properties are no different; unless your home is completely void of all weather and human contact, it’s going to deteriorate and decline.
Unfortunately this means ongoing maintenance for every homeowner in order to prevent major structural damage and consequently, numerous lost sales down the track.
But when it comes to putting money into your home, what exactly can you get a return on – and how does maintenance differ from renovation?
Let’s take it back to cars for a second. If you were to replace your brake pads or air conditioner, much like replacing a hot water system, broken oven or mouldy carpet in a home, this is simply maintenance; preserving your asset by correcting a defect or preventing its deterioration.
However, if you happened to add a premium sound system or snazzy rear wing to your car, you would be improving your vehicle beyond its original state. Similarly, the act of adding an outdoor deck or additional room to your home, or for instance double glazing your windows or throwing on a second storey, classifies as a renovation; it is increasing the value of your property above its original state.
While in some instances the boundary is blurred between maintenance and renovation, only changes that are deemed renovations or capital improvements can boost the income-producing capacity of your property.
Renovations can make a case for an increase in rent whereas maintenance simply keeps your rent up at the same level. When in doubt it is always best to seek the advice of your agent at Prudential Real Estate about how this might affect the tenancy of your investment property.
Want to know more?
Contact Prudential Real Estate on (02) 4628 0033 or via firstname.lastname@example.org.