When renovating your property always hard to know where to begin… It is a very different thing to renovate an investment property compared to renovating your forever home.
Pumped On Property’s Renovation Guide talks about the “ins and outs” when it comes to renovating an investment property. We discuss the difference between necessary changes and luxury changes, and what will actually help you add value to your investment property…
Renovating To Add Rental Appeal:
When you buy an investment property the main reason you would make a few changes to the house is to help with:
- The rental return – meaning how much money per week you can actually get for the rental of that property
- The vacancy rate – meaning how long the property stays vacant for once you purchase it and advertise the property to rent
A simple renovation is usually all is needed to assist with the rental appeal. These changes will help with how easily your property will be rented over others in the same market, and how much return you can get on your investment.
Things such as:
- Professional carpet cleaning
- Painting the interior walls
- Lawn mowing / garden maintenance
- Adding ceiling fans or an air conditioning unit
- Replacing dated shower screens
- Tightening screws on kitchen cabinetry so they work effectively
- New toilet seat
- New bathroom vanity
None of these solutions are overly expensive or take too long, so wont affect the vacancy rate of your investment property.
They are simple solutions that can help with the overall look and feel of your property, and ensure the property is getting premium rent in the market.
It will help to separate your property from others by adding a few new finishes and making the house feel clean and modern.
Renovating To Add Value:
When renovating to add value there is usually a bigger thought process behind the renovation. It is usually a more expensive and more time-consuming renovation, but if done properly will manufacture growth into your investment property.
There is a huge difference between renovating an investment property and your forever home. So often we see people trying to sell their property well above market rate because they over-spent on a renovation and made un-necessary changes.
The reason most people will do a larger renovation on an investment property is to:
- Help with the re-sale value of the house – meaning when the owner decides to on-sell they have added value to the property making it more appealing over other properties in the same market
- Add capital growth – meaning the owner can re-draw on the equity of the property after the renovation, and have enough money for their next deposit
The key to doing a renovation to add value is to not over capitalize on the renovation.
- Avoid buying the most expensive finishes, fixtures and fittings
- Don’t add unnecessary gadgets (i.e. electric fences, too many air-cons, etc)
- Save on labor and materials where possible
In saying this we don’t advise using all cheap finishes throughout the house, but we also know that there is a lot of money that can be saved by buying “middle of the range” things rather than buying premium. For example, marble bench tops versus ceaser-stone, or wall to ceiling tiles in bathrooms versus tiles just in the shower.
What does a value add renovation entail?
- Bathrooms – new vanity, new toilets, replace shower screens, where possible re-spray existing tiles rather than having to replace the whole bathroom, if you do need to replace tiles just tile the necessary areas & gyp rock the rest.
- Kitchen – polish flooring or replace vinyl, open plan the kitchen, living and dining areas, if possible re-paint kitchen cabinetry rather than replacing.
- Common areas – remove un-necessary walls to create open plan living, paint walls, polish flooring or replace carpet, add new light fittings, modernize the window coverings
- Windows and sliding doors – if possible re-spray (powder coat) the aluminum instead of replacing the windows and doors.
- Bedrooms – add fans if there aren’t any, add built in robes, if there is “un-used” areas in the house – underneath or a media room convert to add an extra bedroom.
- Exterior – repaint cladding, new guttering, tidy gardens, re-spray roof
These are a few ways to add value to your investment home through a larger renovation.
Where possible save money by utilizing what is already there but by re-painting or re-polishing to give it a face lift, rather than completely replacing it.
You don’t want to completely skimp out and use poor quality builders or poor quality finishes, but you want to do the best with the money you have and avoid over-spending on the renovation.
After all this is a renovation to add value, you want to keep the costing’s under $50,000 so after the work is complete there is still money to be made or capital to be gained.
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