Be prudent about renovations. The colour palette of the kitchen in your investment unit may offend your sensibilities, but it only makes financial sense to replace it if a better kitchen will stop the unit sitting vacant or lift the rent you can charge. Make a ‘cost-benefit analysis’ of your renovations. If the kitchen is going to cost $10,000, and you’ll have to borrow the money and pay interest, but it will only add $10 a week to the rent, it’s probably better left alone. Don’t ‘overcapitalise’ by spending too much on design, finishes, and fittings.
David would easily have had sufficient equity to purchase another investment property as was the case for his friends who bought properties in suburban Melbourne and Brisbane. Instead he has gone through most of a property cycle, had a small amount of surplus rental income but minimal growth. He is still stuck with one investment property.