Renovating Your Investment Property

The kind of renovations that will deliver the best return on investment in an investment property may be different from those undertaken in an owner-occupied home. Renovations can help increase your rental income or improve the value of your property.

When renovating a rental property, you have to consider the needs of the landlord, tenants and potential buyers. You can make improvements based on your needs or lifestyle of your own home. But a renovation project involving a rental property is different. Ideally, improvements should mean a higher rent, stronger tenant appeal or an uptick in the property’s value. So, think carefully about the types of renovations that tick one or all of these boxes.

Renovations can add value to your property, even if they are small. Check out these simple ideas for budget-friendly renovations that could have a big impact on your returns.

Kitchen and Bathroom Renovations

Renovating bathrooms and kitchens can be expensive, but you don’t have to re-arrange the plumbing or spend a fortune on tiles to make a difference.

To update your bathroom, paint outdated tiles with specialist tile paint, re-grout and add a new shower curtain. Remodel a tired bathroom with modern fixtures, such as new faucets or low-flow showerheads.

Replacing old cupboard doors and handles, along with adding a splashback, could help give a kitchen an updated look without costing much money.

Make Your property Pet Friendly

If you plan to rent your property to pet owners, it would be wise to invest in some secure fencing. Adding side entrance gates to the back garden may also appeal.

If you are concerned about wear and tear, include a clause in the lease that specifies that tenants may be responsible for carpet cleaning or other pet-related costs at the end of the lease.

Add Storage Solutions

Some homeowners choose to add extra storage space to their property. Retail outlets such as IKEA or Bunnings offer affordable storage solutions, which could be a great way to increase the value of your home.

For maximum positive impact, make improvements that appeal to tenants. Your property manager or local real estate agent can offer tips about simple renovations you can do to earn a higher return on your investment.

Cosmetic renovations can be an effective way to increase the appeal of a rental property. A fresh coat of paint can brighten interiors and improve street appeal. Polishing timber floorboards may give an older home a more contemporary feel.

Low-cost & Essential Renovations Only

Landlords are required by law to provide safe, secure housing. They should be aware of the requirements in their area and make reasonable efforts to provide safety-related improvements such as installing smoke alarms, replacing broken fencing and installing window locks. These are inexpensive measures that can save lives.

During renovations, it is important to consider how your property will be marketed to potential tenants. For example, rising power costs may mean tenants prefer energy-efficient properties. When you are replacing appliances, look for those with a high energy rating so that you can save money on energy bills. Low-cost renovations like installing ceiling fans may also make a difference by increasing cross ventilation and air flow.

Avoid Overcapitalising On Your Property

Overcapitalising occurs when homeowners spend more on renovations than the value of the improvements. It is sometimes a costly mistake.

Rent is not always determined by the number of bedrooms in a property. A better strategy could be to focus on features that appeal to tenants such as off-street parking, storage, security and quality appliances. So, a carport might add more value than adding a spa in the bathroom.

Before embarking on a renovation, do some research to ensure that you know the sort of tenant your property will attract and what he or she will find appealing. The last thing you need is to renovate your investment property to the point where residents can’t afford the rent.

Speak to a My LMI Group broker who can help you understand your financing options if you’re looking to renovate your investment property.