This information is a simple guide only, we recommend you consult your financial advisor before considering any purchase.

Improving rental returns

Isn't that what we all want.

But is there "REALLY" an opportunity to do so?

In most cases yes there is.

Let's think about this!

Q.Who really controls the income of your holiday rental apartment?
A. The onsite manager of course

Q.What does your on site manager want?
A. A profitable business / high room rate occupancy level.
(Remember your poor manager doesn't get paid until people get onto pillows)

Q. How does your manager achieve high occupancy
A. Get people to stay in the first place and then to come back to stay

Q. Which apartment would a consumer be most likely to choose to stay in?
And return to stay in?
a) An apartment that is a little tired and rundown?
b) An apartment that is presentable with modern decor?

Q. So which apartment would a manager be mostly likely to show first to a consumer?
a) An apartment that is a little tired and rundown?
b) An apartment that is presentable with modern decor?

Q. Which apartment is probably going to be the last on the list to show to a consumer?
a) An apartment that is a little tired and rundown?
b) An apartment that is presentable with modern decor?

It's not a personal thing, after all, you'd probably do the same thing.

If you want someone to stay, you show them the apartment they would most like to stay in.

Some people may not care too much about rental returns because they may use the apartment a lot themselves and like it just the way it is Thank you.

This opens the door of opportunity for others to increase their rental income,
maybe even to have one of the best occupancy's in the whole resort.

By giving the consumer "more" should increase occupancy.

Occupancy increases....Rental Returns increase

How...

Even the most modern of apartments may be improved... and it doesn't have to be expensive

Air Conditioning,  Larger Televisions,  Nice Bed Heads,  Modern Blinds,  New Light fittings,

And it can even be profitable.. here an exert from the page on taxation

Writing off depreciation

Let's say you decide to buy a property that's a little run down, you believe that if you spruce up the property that it will not only add capital value but you can achieve a better rental figure (rightfully so in most cases, see improving rental returns)

So you pull up the carpet, lay timber floor boards

Pull down the curtains and put up timber shutters

Get rid of the outdated furniture and replace it with new funky furniture

The improvements that you make WILL NOT BE TAX DEDUCTIBLE

HOWEVERall those items mentioned that have been pull up and thrown out can be written off, as long as they are depreciable as fixtures and fittings and have some value in your depreciation schedule, if your depreciation schedule says these items still have a value of $10,000 or $20,000 then

• You may have a $10,000 or $20,000 TAX DEDUCTION writing these items off.
• PLUS the new items go into your depreciation schedule at the value you paid for them, so now you have a higher depreciation this year and coming years.
• PLUS the "higher rent" you are now getting is helping to pay off the improvements.
  (if the higher rent is more than the repayments on the improvements you may even be making a profit, often is the case with holiday/lifestyle apartments, see improving rental returns) 
• PLUS the interest on the amount borrowed to do the improvements is tax deductible.
• PLUS the capital appreciation that you have received may have put you in a position to buy another if you wish.

WARNING:Always consult your financial advisor or accountant before planning improvements as only items that are listed on your depreciation schedule if replaced or improved can be written off.

An item deemed to be part of the building will not be written off, but will be slowly depreciated at a rate of 2.5% per year.

For more information on depreciation click here