Read this before renovating a rental property
Renovating a rental property can result in better returns, especially if your investment is located in a sought-after area. However, it’s crucial that you follow your head – not your heart – throughout the process. Remember, your investment is not your home, so it’s not about what you like but instead what would appeal to the broadest range of tenants.
Here’s what you need to know before renovating a rental property.
Determine your priorities
A new kitchen and bathroom can make a significant difference to the look, feel, and rental value of a house or apartment. That being said, these are big-ticket items, with the average cost of a kitchen in Australia sitting between $15,000 and $43,000.
If you don’t have the budget for kitchens and bathrooms, new flooring, fresh paint, and a spruced-up facade are high-impact, lower-cost options.
As a rule of thumb, owner-occupiers should spend around 5 per cent of the value of the property on the kitchen, and around 1 per cent on the bathroom. For rental properties, your best bet is to stick to about 3 per cent on the kitchen and less than 1 per cent on the bathroom.
Avoid forking out extra cash for special features and bold design statements, as these may not necessarily be of value to prospective tenants.
And finally, set aside at least 10 per cent of your budget for contingencies. Renovations rarely run according to plan, and you’ll be grateful to have a little wiggle room when things go sideways.
Keep neighbours informed
Larger scale renovations can be disruptive to neighbours. As a courtesy, pop a letter into their mailbox that notifies them of the upcoming renovations and offers an approximate timeline.
You might even like to include the phone number of the contractors you’ve hired, so neighbours can reach out directly if they have questions, concerns, or complaints.
Select your tradies carefully
You’ve spent a significant amount of time and money acquiring and caring for your investment property. The last thing you need is an unskilled, unprofessional tradesperson treating is poorly. Here are a couple of tips for selecting a trades business:
- Search a local business directory and read reviews
- Ask friends and family if they have any recommendations
- Get several quotes before making a final decision
- Pay attention to the details – did they return your call in a timely manner? Were they friendly on the phone?
- Check out photos of their past work
- Triple-check that they hold relevant licenses
Leave the floors until last
If you are investing in new carpet, tiles, or hardwood flooring, be sure to schedule the installation after all other renovations are done. Imagine paying thousands for high-end carpet only to find paint splatters, dust, and dirt all over it.
Opt for hard-wearing materials
Some tenants might not treat a rental property with the same care, respect, and pride they would if they owned it. For this reason, choose hard-wearing, easy-to-clean materials where possible.
Related: Wear and tear or accidental damage?
For example, select kitchen benchtops that are heat-, scratch-, and stain-resistant. Choose flooring that isn’t easily scratched. And seek out appliances with extended warranty periods.
Keep finishes neutral
While floral wallpaper or a charcoal feature-wall might be your cup of tea, these bold statements could turn off potential tenants. Neutral colours offer a blank canvas for prospective tenants – whatever their personal style, whatever furniture and home décor they own, they can make your rental feel like a real home.