Renovating to improve returns

By Janet Spencer

Renovating to improve returns is something landlords and property investors need to consider in Melbourne’s competitive rental market.  You want a good tenant and one who will want to lease and look after your property.

Landlords often think only in terms of how much rent per week their investment can provide.  We encourage Buyer Solutions Landlords and investors to think overall yield for a year.  Then vacancy factor, ongoing costs of ownership such as rates and Owners Corporation fees and levies also come in to play.  If your property is coming vacant, you need to minimize the time it takes to secure a good replacement tenant.  Otherwise, your property could sit vacant for some weeks, not producing any revenue.

Tenants are picky and want good amenity in the property that they are renting.  They will shop around and you may lose a good tenant if your property does not offer what they want.

Here are my top ten ways to increase the value of your rental property and increase its rental value and rental appeal.

1. Paint walls

The first sign of a ‘tired’ property are scuffed or marked walls. Every few years you should consider freshening up the property with a new coat of paint. Keep the colour neutral to ensure that it appeals to a majority of potential tenants.

2. New Blinds

Blinds can help shape a room so ensure you use natural colours and use durable materials. Good quality blinds last longer than cheap plastic ones. Have a look through other rental properties in your target price range and see what other investors are doing.

3. Invest in wardrobes

Although this may not increase the value of your property, it can reduce the time your property stays vacant. Many tenants won’t apply for a property if there are no robes in the bedrooms. If you can save a week or two of vacancy each time your property becomes vacant, then investing in robes makes good financial sense.

4. Heating and cooling

Heating and cooling can be a deal breaker for many tenants. If there is no heating/cooling in your property, you’re already losing a large portion of potential tenants. Split systems are a cost effective solution to heat and cool a property and will increase the rental value of your property.

5. Add a Dishwasher

Dishwashers are becoming a deal breaker for many tenants. If you have space in your kitchen to install a dishwasher, it would be well worth doing. If you don’t have the space yet, it will cost you a little more to move cupboards around but you should be able to get that cost back over the next year or two in the additional rent you can charge on your property.

6. New Door Handles

This is one of the most cost effective ways to improve the look of your kitchen or bathroom. From as little as a few dollars each, you can pick up some modern door handles and make the room feel and look more modern.

7. Lighten the place up

You don’t have to spend a fortune on light fittings to make your property look good to potential tenants. But old, worn out light fittings can deter potential tenants. Swapping to LED technology is marketable, lowering the tenants electricity bill makes the property more attractive.

8. Flooring

Depending on where our property is located and your target demographic, picking the right flooring can increase your rental return. Your choice of flooring can also reduce your expenses in the future. Carpet can damage and stain easily so many investors prefer to use floorboards or porcelain tiles.

9. Paint kitchen cupboards

To give your kitchen a face lift without the large expense, consider painting the fronts of the cupboards and drawers to make them look new again. Stay away from high gloss finishes as it’s easier to spot imperfections. Together with new door handles, your kitchen will look brand new and you’ll be able to increase the rent you can charge.

10. Weed, mulch and trim the garden

To give your property curb appeal and make it look as easy as possible to maintain weed, mulch and trim the garden.  Even a tiny garden looks better when in tip top order.  Even better, hire a gardener and charge a premium on the rental to cover the cost.

You can spend a fortune on renovating an investment property but it’s important to set your budget and focus your time and money on adding value – both long term capital value and to increase the rental return.

To discuss how this may impact your property sale of purchase and for independent advice on buying or selling real estate, contact Buyer Solutions +61 3 9816 8555 or email jspencer@buyersolutions.com.au

Buying property, Housing Market, Investment, Investment property, Landlords, Real Estate News & Opinion

Buyer Solutions, investment property, Janet Spencer, leasing property, renovating to improve return, renovation tips