If you have a property that you are looking to rent to tenants, its condition plays a significant role in maximising your investment. Properties in disrepair must be presented in the best possible condition to yield the greatest returns, however, over-capitalising might not necessarily garner a relative return. Depending on the type of property and the type of tenants it would attract, renovations must be chosen accordingly.
We will be exploring the types of renovations that can add value to your properties and how to avoid over-capitalising your property which could reduce possible returns.
Renovating Investment Property
Quick Fixes
Two of the quickest ways to freshen up a dated interior or one that needs renovation is to paint it or to change the carpet. Choosing neutral tones is always the safest choice as they appeal to a wider range of tastes, and this should be a key consideration rather than a style or design that you might want to live in yourself. If the property already has carpet, replacing it or giving it a deep clean can make a big difference, and if the property has hard floors, buffing and polishing them can make them look like new. Depending on whether the property will be pet-friendly or not, choosing the right type of flooring is a key consideration.
Internal Renovations That Add Value
In Australia, staying cool during the summer is of the utmost concern, so for many tenants, not having air conditioning can be a deal-breaker. If your property doesn’t have air conditioning, adding a system can add significant value. For those who cannot invest in an air conditioning unit, properties need to have alternative cooling methods such as fans. In units and apartment buildings that have shared communal laundry facilities, having an internal laundry room – or even just adding a washer-dryer into the kitchen, bathroom, or closet – can be a big plus.
Updating bathrooms and kitchens requires a much higher upfront investment, however, they can yield a substantial return. If you can’t afford a complete renovation, simple changes like replacing a laminate kitchen countertop, replacing tiles, or sanding and repainting kitchen cabinets can make a big difference. If appliances are outdated, upgrading them can help to modernise the property and contribute to the overall aesthetic. Although a complete gut and renovation would be more attractive, a targeted approach focusing on updating key elements can be just as effective.
Avoiding Overcapitalisation
It’s important to make your property as attractive as possible to future and prospective tenants, however, it’s equally important to avoid over-investing in renovations that may not provide a relative return. Renovations can be a slippery slope, and it can be very easy to go over the top to create a luxurious space. However, landlords and property investors must consider the target market and the rental rates they can command, even in a well-developed property. If additional renovations don’t lead to an increase in rent, they can be unnecessary. Instead, focus on renovations that directly benefit tenants and increase the rental value.
By considering your future tenants and the type of renovations they might benefit from, you can renovate your property cost-effectively in a manner that is most attractive to them. If you’ve recently bought a property or are considering an investment, feel free to reach out to me, Ben O’Brien, Head of Residential Management. You can contact me on 0457 433 510 or via email to discuss how you can renovate your property to maximise returns.
About Rose & Jones
Rose & Jones has been helping clients find and purchase properties in Sydney, South East Queensland, and the Northern Rivers since 1998. A renowned property buyers agency across residential, commercial and industrial sectors, every one of our property experts meets our high standards, so you won’t have to compromise yours. With access to a wide network of off-market properties, our team can help you find the perfect property. Also offering property management services and investment advice, make Rose & Jones your go-to when it comes to real estate in New South Wales and Queensland.
