Renovating your investment property is an excellent way to improve your rental yield and build equity. It also helps you attract and keep satisfied tenants, which can result in reduced vacancy periods and help avoid loss of rental income. However, it’s important to make sure you don’t fall into the trap of spending too much or not renovating the right aspects of the property. Here’s a guide on what you should focus on and what you should avoid when renovating your investment.
Choose Cost-Effective Improvements
Renovating is all about getting the most bang for your buck. You should focus on cost-effective value over luxury when improving your investment property. There’s no need for immaculate stone top benches when timber laminate will suffice. Likewise, there’s no need to replace things in the property you could simply repair or improve.
Cut renovation costs by salvaging parts of the property that are in good condition. For example, if the cabinetry is in good order replace the benchtop and doors and keep the storage cabinets underneath. Likewise, replacing handles, fittings and refinishing sinks and baths are all cost-effective ways of sprucing up and adding value to a property.
Focus on Visual Appeal
New flooring, handles, furnishings, light fittings and a fresh coat of paint can completely transform a property, increasing its appeal and adding value. When choosing what to renovate, remember that first impressions count for a lot when it comes to property.
The kitchen and bathroom are areas that have the biggest impact and add capital value to the property while making it more attractive to potential tenants. Choose neutral colours and a simple and classic style to attract more people and ensure the place doesn’t look dated a few years down the track.
Know Who Your Target Market Is
Understanding your target market is the key to getting value out of a renovation. What kind of demographics are attracted to this area? Families, professionals or students? What do they look for most in a property? Is cosmetic appeal as important as functionality for them?
Do your research and take a look at other properties in the area to get an insight into the local culture and property features that are currently in demand. For example, adding eco-friendly features to a property is an increasingly effective way of attracting tenants whilst also adding capital value. ‘Green’ additions might include installing a rainwater tank, a greywater reuse system, adding solar panels or improving insulation to reduce heating and cooling related energy use.
It’s essential to be aware of the potential dangers involved in renovating a property; from asbestos and lead poisoning to electrical dangers. Never complete any work outside your skill level or without the right knowledge and safety measures in place to ensure your safety. Electrical work, in particular, must be carried out by a qualified electrician.
A good property manager can help you plan and execute your renovation in order to maximise return on investment. They’ll guide you on what you could do to get the most value for your particular property and budget including recommending materials, style and functionality, along with helping you understand the type of tenant your property will attract.