How to renovate an investment property
- Posted By Nikki Montaser
There are a few things you need to consider when renovating an investment. Creating a budget to pick the best fixtures and fittings and getting the administration and project management right is vital. Below, we outline some of the primary considerations.
Make a project list
Make a list of all the parts of your rental property that you want to upgrade. Your property manager can help guide you on what improvements will give you the best rental return. When rentals tick all of the boxes, tenants are more likely to stay long-term, thereby decreasing your vacancy period.
The general rule of thumb is to spend approximately 3 to 4 per cent of the property's value on kitchen upgrades and under 1 per cent on the bathrooms. When you're thinking of the improvements on this list, consider what will give the property a "wow factor" for potential tenants. And don't forget to budget 10 to 20 per cent for contingencies.
Be mindful of fixtures and fittings
A few careful decisions on fixtures and fittings can make all the difference in attracting quality tenants. Putting some thought into stylish and usable but easily maintainable areas is invaluable.
Be mindful of spaces. For example, more and more people are working from home now. If you have a space that tenants could use for a home office, make sure there are plenty of power points available.
Air conditioning and storage are also important considerations.
Determine a budget and the available deductions
Renovating will result in some significant expenses for your property. Some of these can be fully deducted in the current financial year, but other costs will depreciate over several years. Make sure you put together a budget and speak to your accountant to know exactly where you stand.
Talk to the body corporate early
If your property is in an apartment building where you'll need approval, talk to the body corporate and put your case forward early as the process can take a while. Include rough timelines for the renovation, your plans for the property, any safety precautions you need to consider and note when noise disruptions may occur.
Keep neighbours informed
Let neighbours know that renovations are taking place and when noise disruptions may occur. If it's an option, you can also display a notice in the building's common areas. Knowing when noisy periods are happening and for how long may help stop complaints from your neighbours.
Renovating your rental property not only increases the value of your investment but will attract higher rental prices and ensure you find quality tenants. Remember, a tenant wants a blank canvas to work with when they move in, so keeping everything neutral and fresh is essential and will pay dividends in the future.