There are many reasons why you might want to undertake a renovation. But before you get stuck in, here are some key points to consider.
It’s often towards the end of a tenancy that rental property owners consider undertaking some minor renovations. It is, of course, easier to do work on an empty property than a tenanted one.
There are many reasons why you might want to renovate. It may be to improve your rental yield, increase the value of your property, attract better quality tenants, or a combination of factors.
The renovation needn’t take a lot of time, as there are many little things you can do to rejuvenate a property in a short amount of time. But before you get stuck in, here are some key points to consider.
#1 – Don’t skip the planning stage
Even if you are only considering a small renovation, don’t think you can bypass the planning stage.
You should still have a clear budget in place and carefully plan the various activities, so as to avoid a cost blowout and an extended vacancy period.
Remember that tradespeople have lead-times and most won’t be able to start a job immediately.
Try to inspect your property before the tenants vacate to give you the most time for planning, and a good tip is to ask the outgoing tenants for feedback on what could be done.
#2 – Consider your return on investment
Don’t get carried away in the renovation whirlwind. Be realistic about what things cost and only replace items when it is absolutely necessary.
Always consider your return on investment. Will the increase in rent justify the cost? How long will it take to recoup your investment?
It helps to research the market and talk to your property manager about what is expected in the area and the features that are most sought-after.
#3 – Think before you scrap
Many investors are unaware of the fact that certain plant and equipment, which may seem worthless and ready for replacing (like carpets and hot water systems), can actually be claimed as a tax deduction.
Before you discard or demolish anything, make sure you get a quantity surveyor to put a value on the items you are scrapping.
The residual value of these items (i.e. the amount that is yet to be written off) can generally be claimed as a 100% tax deduction in the financial year that they are disposed.
#4 – Concentrate on the right areas
Focus on the upgrades that will be most welcomed by prospective tenants. A lick of paint and new carpets are always popular choices because they make a strong impact.
New benchtops and window coverings can also help to transform the look of a property.
But it’s not always about looks. Some of the best upgrades may involve enhancing the security or comfort of your property.
And don’t ignore the outside, as street appeal is very important. You don’t want prospective tenants dismissing your property after a quick drive-past. Little things like painting the fence and tidying the garden can do wonders.
#5 – Suitability
Whichever areas you decide to focus on, remember to always choose tenant-friendly items. Buy things that are durable and hard-wearing as this will save you time and effort over the long term.